Will PG rentals fall in a post-COVID-19 world?


We examine the impact of the Coronavirus pandemic on the manner in which paying guest accommodations operate in India and whether the rentals for the same will reduce

As the Coronavirus pandemic forces people to place greater importance on their own safety and security, home ownership could become more popular in the post-Coronavirus world. This has been the verdict in a number of surveys to assess asset preferences of consumers, once we are able to tide over the crisis. According to a joint study by Housing.com and NAREDCO, 35% participants voted in favour of real estate as their preferred asset class. Consequently, rents in India’s major markets are likely to drop, amid a growing preference towards home ownership. This trend may also affect rents in paying guest (PG) accommodations.

 

Will PG rentals fall in a post-COVID-19 world?

 

See also: Impact of Coronavirus on real estate in India

 

Impact of COVID-19 on demand for PGs

In the aftermath of the COVID-19 pandemic, those opting for PG units, would be acutely conscious of the level of hygiene, maintenance, safety measures and social distancing that the operator offers. While co-living operators already pay a lot of attention towards the first two factors, PG operators are typically found lacking across these standards. Based on this notion, some opine that the co-living segment could benefit at the expense of PGs, in the post-Coronavirus world.

“If PGs were an option for working professionals before the Coronavirus struck, owing to its pricing advantage, this will most likely change now. Organised co-living players could see demand rising, as personal safety and well-being takes centre stage. This would certainly have an impact on demand for PGs and impact business, unless PG operators rise up to the occasion and make the necessary changes, to incorporate hygiene and distancing norms,” says Ratan Bhalla, a Gurugram-based property advisor.

See also: How will COVID-19 impact the co-living segment in India?

 

COVID-19 impact on PG rentals

The single biggest factor, based on which mostly unorganised PGs in India continued to thrive, is the pricing benefit. “A student can afford to live in a decent area, without having to shell out a huge monthly rent. In cities like Delhi, for example, where a large number of students come to pursue studies every year, you could find a PG in Delhi for as low as Rs 5,000 a month even now. Even if you opted for some high-end PGs, rates would not go higher than Rs 12,000 to Rs 15,000, monthly. On this point, PGs will continue to score over co-working spaces, at least among the student population,” says Sanoj Kumar, an east Delhi-based real estate broker.

“Since PGs will now have to offer a certain level of hygiene and social distancing, they would increase the monthly rent, in order to cover these costs,” says Vijay Malhotra, a real estate broker primarily active in north Delhi, which has a thriving PG market, because of its proximity to the Delhi University’s north campus.

 

FAQs

What is average rent for PGs in Delhi?

Depending on the area and the facilities offered, you can get a PG accommodation in the range of Rs 5,000 to Rs 15,000 per month.

What is the difference between PG and flat-based rent systems in India?

In a rented home, the user pays rents for the entire unit, while in case of a PG they pay for using a certain portion of the dwelling. In the latter, the landlord would typically live with you and you will have to share the premises with other people. This is not true in case of a rented home.

Will PG rents fall because of COVID-19?

PG operators may be forced to cut rents to attract tenants in a post-COVID-19 world. On the other hand, operators who offer better hygiene and social distancing, may charge a premium for these facilities.

 

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