Bengaluru rentals stay high as landlords capitalize on return-to-office demand, but tenants remain wary

A Bengaluru landlord’s refusal to lower the ₹23000 rent for a room in a 3BHK backfired, leaving the property vacant for 5 months and with a loss of over ₹1 lakh

A Bengaluru landlord's refusal to lower the ₹23,000 rent for a room in a 3BHK near Whitefield recently backfired, leaving the property vacant for five months and causing a loss of over ₹1 lakh. While real estate brokers acknowledge that this may be an isolated incident, many landlords in Bengaluru are increasingly rigid on rental prices to maximize their income post-pandemic and cash in on the increased demand as employees return to the office.

Bengaluru’s real estate market, once fueled by the booming IT sector, is reportedly showing signs of strain. A Reddit user recently sparked a debate, pointing to layoffs and stagnant hiring as major concerns. (Representational Image) (Pexel)

Experts advise that landlords need to be more attuned to current market conditions. With job market uncertainty and layoffs impacting disposable incomes, tenants are becoming more cautious about their rental expenses.

In this case, a Bengaluru landlord's refusal to lower the ₹23,000 per month rent was deemed too high by potential tenants, leaving the room vacant for five months in an upscale apartment near Whitefield's eastern IT corridor. As a result, the owner incurred a loss of over ₹1 lakh in potential earnings, underscoring the risks of overpricing in a competitive rental market. Sanjay Ghosh (name changed), who occupies one of the rooms in the apartment, shared this insight with HT.com.

"Had he priced it around ₹20,000, he might have found a tenant. Instead, by keeping the rent too high. How does he expect to recover this? In fact, instead of correcting the rental costs, he is planning to increase the rental for my room from April onwards! The total apartment rent is around ₹68,000 per month," Ghosh said.

Over the last few years, comparisons have been drawn between Bengaluru and Mumbai. Rentals in the IT capital continue to increase 23-30% annually. Some apartments near Indiranagar and Whitefield reported a 40-50% hike in rentals last year.

Experts say the surge in rental prices is largely driven by landlords aiming to recover from pandemic losses and increased demand as employees return to work.

Bengaluru landlords trying to capitalize on high demand

Real estate brokers say that while this may be an isolated case, many landlords in Bengaluru are increasingly firm on rental prices, aiming to maximize their rental income.

"Landlords usually market their apartments for 2-3 months before considering a 5% rent reduction if they struggle to find tenants. However, with demand on the rise, many are now holding firm on their asking prices, expecting to secure tenants at higher rents," said Sunil Singh of Realty Corps.

Amid job uncertainty, tenants urge landlords to be mindful of market conditions

Ghosh emphasized that landlords in Bengaluru need to stay attuned to current market conditions. With job market uncertainty and layoffs impacting disposable incomes, many tenants are becoming more cautious about their rental expenses.

Since 2024, major multinational corporations such as Intel, Microsoft, and Tesla have reportedly announced large-scale job cuts to reduce costs and optimize operations. The rise of automation and artificial intelligence has reshaped the skill sets demanded in the IT sector, creating job market shifts—slowing growth in some areas while opening new opportunities in others, experts say.

Meanwhile, the supply of rental properties continues to rise as new residential projects are completed each year. According to data from Cushman and Wakefield, around 10,500 new units were launched in Q4 2024, marking a nearly 17% quarter-on-quarter growth and a 3% increase from last year. North and East Bengaluru led the way in new launches, accounting for 37% and 31% of the total.

Tenants warn that holding out for excessive rents could lead to prolonged vacancies, resulting in greater financial losses for property owners.

Prime areas in Bengaluru command high rentals

Real estate brokers have noted a sharp rise in rental prices across Bengaluru's prime locations over the past two years. In upscale areas, 3BHK apartments now start at ₹1.5 lakh per month, with the cost of purchasing an apartment in these neighborhoods typically ranging between ₹3-4 crore.

In sought-after localities like Koramangala and Indiranagar, rents in gated communities for a 2BHK often exceed ₹65,000 per month, with security deposits ranging from ₹3-4 lakh. Independent houses in Koramangala command even higher rents, with 3BHK units priced between ₹1.5 lakh and ₹2 lakh per month, depending on the location, said Kiran Kumar, Vice President of Hanu Reddy Realty.

In Indiranagar, a 1BHK apartment (400-450 sq. ft.) rents for ₹20,000 to ₹25,000 per month, while fully furnished units can cost around ₹30,000. A 2BHK in the area starts at ₹40,000 and can go up to ₹60,000, depending on the property’s amenities and location.