House rents shoot through the roof

The big story in recent years always has been how difficult it is buy a house in the city anymore. Little mention is made of how rents have practically rendered many areas unlivable. I don’t think it is possible to live in many areas like Adyar, Besant Nagar and Alwarpet if you are not into IT. Or you are a millionaire-businessman.

I like posh areas. I am sure every city has a few where no one except the very rich can live. But when rents in South Chennai shoot like the roof overnight like the way they have, we really have to stop and ask the question why?

At the end of the day I think the answer is that this city doesn’t expand to accommodate its shooting population. If the suburbs had developed at a pace they should have, they would surely accommodate millions of people. If infrastructure like news roads and public transport is developed, rents surely can plateau.

I recently rented a house in Triplcane. I doubt if the house is over 500 sq feet. Two rooms, a kitchen and a bathroom. I pay Rs 5,000. I know for a fact that this is way too high. But when I asked around during my house hunt, I found that rates had uniformly shot up. So have the number of months of rent taken as advance. I paid Rs 50,000 as advance. I hope not everyone is having to do this sort of a thing. I do hope it doesn’t get insane.

15 Comments so far

  1. Madhu (unregistered) on February 14th, 2008 @ 4:02 am

    nandu I totally agree to what you are saying.
    I was born and raised in triplicane until i came here to US and its a while now. I know that triplicane / mylapore / mandaveli have been a destination to people who are rich as well as poor. Besent nagar , shastry nagar and indra nagar where the places where the higer group income people used to live .

    Recently i was talking to one friend in velachery working for a multinational IT consulting company in india, she was telling me that she got a 2 bed room apartment for 40 lakhs in velachery, I was shocked, since the time i was in chennai, velachery was a remote area and you can get big house for 3000 rupees. And my friends apartment is rented for 8000 .

    The whole real estate is screwed up in india I think. But I have a point to make, what makes people to think that they can pay off a 50 lakhs loan ? trusting a job in a indian IT consulting company? Trust in outsourcing, People need to understand , now a days, india is not the only destination, we have lot of competetion from poland, thailand , china, russia even pakistan.
    People have to understand that consulting company dont have any specific business, they consult for a business firm called clients, When the clients run out of business consulting companies will not get money and now given the case that US economy is sliding to a recession I am woundering how the people will pay off the loans!! The only option they will have is to turn in the mortgage to the bank, But other than IT people and business people no one can afford to buy a 50 lakhs apartment, I am sure, not a chemical engineer is paid 10 lakhs , not a govt employee (as my father is a govt employee). The banks will run out of money since they dont get interest and principle neither will they be able to sell those houses. It will lead to a recession in india. Indian economy is not strong enough to recover from a recession .

  2. @madhu (unregistered) on February 14th, 2008 @ 7:58 am

    Madhu – rent price goes up with demand. and i do not agree with your indian economy crap! macro economy is not a topic for simpletons.

  3. Xman (unregistered) on February 14th, 2008 @ 8:23 am

    Take over Govt. offices; Builders offices;
    Housing development offices;
    Become squatters. Most local and state govt.
    has laws which make it difficult to remove squatters.
    Start what Gandhi did against the Brits..
    when they taxed Salt..
    Satyagraha (?) for affordable roof.
    Don’t be passive..protest..become visible..
    get your fellow journalists to support..
    Drag the greedy landlords to court for asking
    for exhorbiant amount of deposit.
    Publicize greedy House lords name, photos and their supporters..
    Be counted..Live with dignity.. was the ‘putt putt’ rickshaw blokes,
    today is the House lords..tomorrow they will charge you $10 for a rice cake..

    There is always the final option..Leave

  4. Rajesh (unregistered) on February 14th, 2008 @ 10:23 am

    This city is becoming totally unlivable for all non-IT people. I don’t know where else to go! Who is to be blamed?

  5. Manmadh (unregistered) on February 14th, 2008 @ 11:36 am

    The IT industry has its ups and downs. There is always a boom before the bust. Remember the last time the IT bubble burst and people went to office and found nice pink slips waiting for them. The foundation of IT industry is weak as it solely depends on the US for its sustenance. The US economy is now on a downslide and is on the doors of a fullblown recession. Many IT majors have started cutting the variable component of their employees’ salaries. This may also not prove effective in the long run and lay offs may be the only viable solution for these companies. Youngsters who had bought flats for ludicrous amounts would not be able to pay back loans and banks would take back these flats and resell them at lower rates. However, such a scenario would be a short term event and the IT industry would bounce back alongwith the US economy. So non-IT people would have to make hay while the sun shines.

  6. nandhu (unregistered) on February 14th, 2008 @ 2:02 pm

    madhu, yes the rents are getting crazy.

    and no, i dont think i want to get on the let’s-hate-the-IT-guys bandwagon. this bandwagon is so big, that Outlook had a cover story a few weeks ago on how everybody hates the IT guys in Bangalore.

  7. tsk tsk (unregistered) on February 14th, 2008 @ 3:26 pm

    The sales of real estate is down because of high interest rates and prices, the alternative is to rent and so prices are shooting up.

    Quite frankly, there are several apartments in the suburbs that are sold and not occupied. Which indicates that they are investments and not purchased by users

    It is not entirely correct to blame the IT Industry. They are just users – hence they cannot send prices of land up so high. Its real estate speculators with heavy pockets of black money that do margin trading which is driving up the market.

  8. ITRules (unregistered) on February 14th, 2008 @ 3:38 pm

    Hey folks why is everyone against IT I don’t understand. I am not an IT guy, I am a MBA in the marketing field. Firstly, IT field is so competitive and everyone wants the IT related seats in engineering colleges in T.Nadu. However if you are not in IT and can’t put a stiff fight with your HR for negotiating your hike please stop cribbing. Yeah the rates have gone up in the city. How is that the same folks like you want your brother in laws and husbands to be IT guys? Check out the matrimonial, government doctors engineers are not required it’s the IT boys. You I and everyone are responsible for it. There are positives and negatives to IT guys making lots of money. However the positives are way too much. Take the US where the governments officials are paid handsomely, the other industry guys are also compensated quite well.
    However in India IT is the only area not understood by our fantastic politicians so the salaries carried away by IT folks are quite naturally big. Instead of the politicians these folks pay big time for the houses in Chennai and naturally the prices go up due to supply demand. However the fact is IT is the only industry which came so fast that the politicians and government officials don’t have much of a holding on it. The taxes paid by the IT field are substantial to the countries growth. If you guys really want to do something set IT salaries as benchmarks and see where all you can cut costs and bribes and increase your salaries. For example all petroleum companies are into losses why you cant increase the prices. Chemical companies are not paying well because they have to many strings attached and they don’t innovate. I am just reminded of the Indian crab story — In a aquarium in America all types of crabs were kept in a closed jar except the Indian crabs. Why simple, when one tries to go out all the others don’t let it out. Sounds familiar!!!! Smelly Crabbies…. Cheers.

  9. raj (unregistered) on February 14th, 2008 @ 3:53 pm

    How Land Prices go up… 1.In an attempt to give more loans and garner a substantial percentage as commisions loans are disboursed (Money Supply).
    2. The appreciation rates of land have been amazing in the last 3-5 years as compared to anytime , making people go for the loans.
    3. Brokers want a bigger commision, 1 percent of 3 lakhs is more than 1 percent of 25 lakhs, prompting them to jack the prices up north.
    4. 85 percent of the poperty value can financed by banks. However by quoting the price of the property as more. For example if the property value is 10 lakhs and bank can give home loan of 8.5 lakhs 1.5 lakhs has to be paid by the individual. However if the individual say the property is 11.8 lakhs (85 percent of which is 10 lakhs is given by bank) and the individual actually pays the owner of the property 10 lakhs. Some minimal charges will be paid as extra for the extra paper work. his is a main reason for the prices to go up.
    5. The NRI population comes back to INDIa one ine day and the number is on the raise especially now rather than ever ever before. The NRI want their kids to study here as they don’t want to loose them to western culture etc and inturn pollute our lands with the culture they picked up elsewhere by buying properties for whatever prices they are quoted without scrutiny.
    6. Government does not implement the pay commision for years together and God know when it will. Government officials are the suferes.
    7. Politicians are busy striking deals with the NRIS, FIinvestors and the likes, without caring for the localites.
    Please add to this list folks. really like the crab story . hehehehe (with caste, religion, language, skin colouration, regional biases disparities amongst us its so true !

  10. ITGuy (unregistered) on February 14th, 2008 @ 5:14 pm

    When I was paying a high rate of interest, high rent and high tution fees nobody helped me. When i got a poperty with the hard earned money and rented it people don’t want to pay market rate rent what crap?????? Losers!!!!

  11. Govar (unregistered) on February 15th, 2008 @ 3:45 am

    The only people who make the most out of nothing out of this whole boom thing are the landlords. I’m from IT, and I know for a fact that the rates (rental and purchase rates) pinch every body – including IT folks themselves.

    And for all those doomsayers – who foresee a recession in the US to hit the Indian IT landscape, a couple of things. India is still a leader in Outsourcing landscape with not one close competitor in sight for various reasons. Number two, Indian IT and ITES industry alone is going to contribute 20% to 25% of the Indian GDP growth. So if there is trouble for IT industry, it is going to be felt in a lot of industries – retail, finance, real estate etc. Unless you are employed in a Govt. firm, you aren’t going to like that.

  12. sachin (unregistered) on February 15th, 2008 @ 3:52 pm

    1.5 which is amongst the worlds Lowest Floor Space Indexs combined with poor infra are to blame in India.

    For example, Prices in Mumbai are as much as NYC simply because there arent enough homes and accessibility to business districts is poor.

  13. Ramesh (unregistered) on February 16th, 2008 @ 10:31 am

    I am going to commit suicide one day all because of these IT guys who made my life miserable with the increase in rates of almost anything in this city. I will write a suicide note stating all IT guys are responsible for this.

  14. Govar (unregistered) on February 17th, 2008 @ 5:04 am

    Ramesh – that was funny. Thanks.

  15. Jagan (unregistered) on February 20th, 2008 @ 3:12 am

    I live in US and own a house in velachery. I bought it for around Rs750 per sq ft. Now the cost per sq ft has increased 3 times. The reason for the rise is because more people have moved to the city and thus increasing the demand. This has nothing to do with IT industry. The govt should have developed the outskirts of the city so that there is less stress in the city.

    Also people who think Indian IT industry depends on US are unfortunately completely wrong. IT companies are constantly focusing on rest of the world outside US, so that any slow down in US economy does not affect the revenue generation.

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