With Visakhapatnam set to become the state’s executive capital and the metro rail project getting underway, residential rentals in localities along NH-16 are witnessing a steep appreciation. While the average appreciation rate for flat rents in Visakhapatnam is 8-10 per cent, in the last two months rents have increased by as much as 15-20 per cent in some localities.
“In January last year, I had taken a two-bedroom flat on rent on the Madhurwada highway for a monthly rent of Rs 9,000. This year the owner has suddenly increased the rent to Rs 15,000. After a massive search I managed to find a two-bedroom flat for Rs 12,000, but it’s about a kilometre away from the highway,” said KV Prasad, who works with a private insurance company.
As per Greater Visakhapatnam Municipal Corporation (GVMC) estimates, around one lakh people from other areas of AP and other states migrate to Vizag every year, primarily for work and education. Most of these families look for rental accommodation. Many have even made Vizag their permanent home and have been living here for decades.
Experts said the increase in rents has come much earlier than expected. They say they expected the increase only in November or December 2020, but flat owners in some localities in the city have already started increasing the rent anticipating a rise in demand. “In fact, to some extent you can blame the tenants for this demand. Whoever is looking to rent a house on a long-term basis is eyeing localities close to the proposed metro rail stretch. The idea is to take a house on rent early while the rents are still low and extend the contract so that the rent appreciation is low even after five-six years,” said DK Raju, a property broker.
It seems even owners have caught on to this and many are reluctant to sign fresh agreements with the present tenant. The reasoning behind this move is simple. With the old tenant, the rent can only be increased by 10%, while for a new one it can be much higher.
“I had purchased my second flat on loan and am spending Rs 10,000 per month as EMI. Till now, whatever I was getting as rent, I used that to pay the EMIs. I see no problem in hiking the rent if I can save some amount for myself after paying the EMI,” said K Pravakar, who owns a flat in Carshed area.