Demand for Bangalore penthouse rentals slumps

Bangalore

A simple search on penthouses on rent in Bangalore throws up umpteen options. The super rich, who bought these trophy flats at a premium, are now fishing for tenants. Many penthouses with a good view, location and space have remained unoccupied for the last 4-6 months as owners are holding steady on rental rates even as demand has slumped.

Many landlords are keen on corporate leasing. But the prevailing cautious sentiments have forced companies to be prudent with high value tenancy deals. Besides, tenants have the option to rent a villa for the price of a penthouse.

"Penthouse is a premium product. The number of enquiries from expats has fallen after the slowdown. The rental values for penthouse flats are now 15-20% less compared to the 2007 levels," said M R Jaishankar, CMD of Brigade Group.

In Bangalore, penthouse sizes range from 3,000-5,000 sft. As penthouses rents are steep, MNCs are evaluating small configurations with lower rentals. "There is very little demand for penthouses demanding a rent of Rs 2.5-3 lakh per month," said Anuj Puri, country head, Jones Lang LaSalle India.

A 4,000-sft penthouse at Lakeside Habitat in Hebbal with an additional terrace space of 1,500 sft is priced at Rs 2.5 lakh a month. "One of the VPs of IBM vacated the flat. It has been lying vacant for the last 4 months. We will fill the vacancy. However, many tenants are negotiating on the rentals asking us not to increase rent when the contract comes up for renewal," said Siddique Beary, director of Beary's Group that developed Lakeside Habitat.

A 4-BHK penthouse in Prestige Acropolis measuring 3,100 sft commands a rent of Rs 1 lakh. A duplex penthouse in Sobha Ivory on St John's Road is available for rent at Rs 1.30 lakh. Penthouses in Embassy Habitat, Prestige Shantiniketan, Vaswani Exotica are lying vacant for a few months, say sources tracking the sector.

A 4,500-sft duplex penthouse in Nitesh Buckingham on Lavelle Road commands Rs 3.50 lakh as monthly rental. One in Mantri Sarovar in HSR Layout is available for Rs 82,000 a month. "The supply outstripped demand especially on the periphery. The incremental supply also indicates investor stock in the market," said Anand Narayanan, national director-residential in property consultancy Knight Frank India.

The rental yield on penthouse flats has reduced over time. "A rental yield of 4-5% is very optimistic. A 2% rental yield on capital value of Rs 10,000 per sft is more practical," he added.

As companies move away from perquisites to a cost-to-company structure (CTC), employees have more options. "This allows employees to consider smaller configurations at around Rs 1 lakh rent. When rent is as high as Rs 2 lakh, one would wonder if it would be more economical to purchase something. The rental market can stay afloat if there is an imminent capital value correction," said Prashanth Sambargi, partner at Mars Realty.

Source : www.magicbricks.com