The demand-supply gap is exacerbated by the Land and Development Office’s (L&DO) strict rules for converting leasehold properties into freehold since 2022, leaving many transactions stalled and keeping much-needed inventory off the market.
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“One of the defining characteristics of Lutyens’ Delhi is how rarely properties change hands,” said Amit Goyal, MD, India Sotheby’s International Realty. “With such limited inventory, even a modest rise in demand has a significant impact on rentals. Today, affluent families, diplomats, and corporate leaders who want a Lutyens address are increasingly choosing to rent because there simply aren’t enough homes available for sale.”
The demand surge has pushed rentals more than 15% this year, particularly for well-maintained, ready-to-move-in homes.
“Until more homes become available for sale, we expect rental values to remain firm,” Goyal said.
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Delhi-based BI Luxury Residences, which has developed a luxury project in central Delhi having 19 boutique apartments, said demand for renting well-maintained property has spiralled.
“There are primarily three reasons—one who are not able to buy in Lutyens are preferring to rent to stay in the locality,” Shashank Bhagat, chairman, BI group, told ET. “Then there are people who want to upgrade the bungalow they own, and for the time being shifting to our complex since there is no managed residences bordering Lutyens Delhi.”
A 7,000 sq ft penthouse at the company Trident Residences project has a monthly rental of over Rs 20 lakh, comparable to that of a bungalow at Golf Links.
“Some people are also moving in because it’s a brand new development and in that region, there is no new development coming,” Bhagat said.
Located in the heart of India’s power corridor, the LBZ spans 28 sq km and houses around 3,000 bungalows, primarily occupied by ministers, judges and senior government officials.
About 600 properties in the area are privately owned by some of India’s wealthiest individuals. Designed by Edwin Lutyens between 1912 and 1930, the LBZ remains one of the most exclusive and expensive real estate zones in the country.
Some of the recent transactions include Gentex Merchants Pvt Ltd, a company linked to Lakshmi Mittal, buying a 3,540-square-yard bungalow on APJ Abdul Kalam Road for Rs 310 crore.
Lutyens homes are owned by many of India’s business elite.
Sunil Bharti Mittal, Naveen Jindal, Vijay Shekhar Sharma, as well as Adani Properties of the Adani Group, have acquired residences in this ultra-exclusive area. However, the restrictions placed by L&DO have halted further transactions.
In July 2022, L&DO issued directions to the Delhi government’s revenue department, asking the latter to suspend registrations of any property without an NOC from the department.
Most of the properties in Lutyens’ Delhi fall under L&DO and are leasehold. A buyer is required to pay conversion charges and property tax, and in many cases, these charges were not being paid, leading to intervention by the ministry.
According to a letter from L&DO in July, there are around 57,389 residential, 1,597 commercial, 1,430 institutional and 110 industrial units under its jurisdiction in Delhi.