Article from ET Realty
THANE: The real estate scenario here could possibly be witnessing the “buy to leave” phenomenon which has been noted in parts of London city where investors purchase property and leave it empty. Experts are drawing this parallel especially after witnessing an unexplained slump in rental sector in the first two quarters of this fiscal.
Records of leave and license documents registered with the state registrations and stamps department reveal that while there is an increase in numbers in Thane district, the graph reveals an extremely slow pace of growth. The volume of those opting for flats on rent in the district that includes Thane city, Navi Mumbai, Mira-Bhayender and Kalyan-Dombivli is barely 3.5% higher compared to the last fiscal while the same was nearly 22% compared to the first half of the 2013 fiscal year.
The first quarter that is considered a prime period for registering rental deals saw a dip in volume this year as compared to 2014 with just 11665 deals inked as compared to 12501 the previous year. Though, the volume picked up in the second quarter to reach 22830, the figure is barely 756 more compared to 22074 last year in the same duration. The jump in registered rental transactions was nearly 22% in 2014 that saw a rise of nearly 4744 from 1733 transactions registered in 2013.
The rental market was till recently considered a safe bet by investors and second home buyers who often preferred the option to ensure tax benefits after availing home loans and also earning income from rentals. Not many wanted to enter into purchasing as the costs were prohibitive and there was a general perception of the realty rates thawing in the near future which is a common phenomenon in London now, says a real estate consultant.
A segment attributes the abysmally slow pace to migrating job opportunities in neighboring district coupled with affordable realty available there that could be eating into the rental residential market in Thane.
However, the trend seems to have now turned as per experts who blame increasing rental rates and inadequate infrastructure and not to add the long commute time for travelling from suburbs to the city. “Rising rental rates is one of the aspects that could have led to the drop in the numbers. Also, there is a possibility of lesser migration in the district happening as industries are shifting to adjoining districts like Raigad and Palghar,” says Joy Sanyal, realty expert and national director, Jones Lang Lasalle.
Experts also attribute that a section of those working in South Mumbai would find it convenient to spend extra money on rentals in the adjoining suburbs rather than spend time and money in commuting to farther suburbs in Thane like Kalyan or Bhayender. Developers said the situation is looking up in the real estate market and reasoned the numbers would be lesser this year because many residents would have opted for longer duration of registrations.
An expert said it cannot be denied that a section would simply bypass getting the documents registered and instead opt for a notarized document.
A state revenue department official however denied there would be any major changes in the numbers as the trend of getting deals registered in rising in urban areas.