Rental and purchase prices have fallen by 20 to 30% since the start of confinement. In one of the most expensive cities in the world, the phenomenon is unprecedented.
Like many of us perhaps, I’m a secret agent – sorry, secret realtor. Even when I have no intention of moving, I scan the ads for rental apartments on the Internet, to be sure not to miss anything. And while I don’t plan on becoming a homeowner, I also keep an eye out for properties for sale in my favorite neighborhoods. My fictitious investor blood boiled over when I saw prices in Bombay plummet by 20 to 30% since mid-March, the start of the confinement, which is extended here until July 31 at least.
Pay cuts and layoffs
Usually, real estate prices in the economic capital of India, built on a narrow peninsula, are among the most expensive in the world. Rent levels, while generally below Parisian standards, in fact largely exceed those of major French cities. However, it is mainly on purchase that the amounts reach their peaks. In an upscale neighborhood like Bandra, Juhu, Malabar Hill or Colaba, luxury apartments are trading at around 15,000 euros per square meter.
But the coronavirus has been there. A real estate agent from Bombay (a professional this one) interviewed by the Indian television channel CNBC explains that he has never witnessed such a drop in prices in his 15-year career. In India, confinement rhymed with salary cuts and layoffs, without any economic security device such as partial unemployment. The poorest found themselves on the streets, and the shock was also severe for members of the Indian middle classes, many of whom are still deprived of income.
Internal migrants
Many tenants are thus renegotiating their rents downwards and landlords have no choice but to accept because they know that it will be difficult to find a replacement during confinement. A real paradigm shift, because rental contracts in Bombay generally provide for a rent increase of 5 to 10% per year! And once the lockdown is lifted, experts expect the trend to continue for several months. Impoverished households will seek to move to smaller, less expensive homes, a phenomenon that we are already seeing in reality.
Added to this is another socio-demographic fact: Bombay, even more than other Indian cities, attracts a lot of migrants from the interior, whatever their social origin. The inhabitants of the poor countryside come to find unskilled work there, and a whole young graduate also begins their career there. Sometimes salaried, sometimes self-employed, these young city dwellers have also been hit hard by the crisis. While waiting for activity to resume, many have chosen to leave their apartments to return to their parents as soon as the interregional borders have reopened.
Secondary residences
But for those who can, now is the time to do business! Thus friends who had to leave their apartment found a five-room apartment with a terrace for the price of a three-room apartment in normal times. New medium-term trends are also emerging. A study by real estate consultancy firm Savills India cited by the daily The Hindu , thus notes an emerging demand for accommodation equipped with workspaces and excellent Internet connections.
On the side of the most privileged, second homes will also be on the rise, particularly in Goa (an hour’s flight from Bombay) and in the ghats, these hills of Maharashtra easily accessible by car which, in addition to having beautiful landscapes, benefit from a pleasant climate thanks to the altitude. Enough to confine yourself comfortably to green. I promise, I’m on the case. All I have to do is set up additional email alerts and I’ll let you know.
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