An Explainer: Occupancy Rate

The ratio of rented out apartment to the total number of units available in a city's rental market is called the occupancy rate.

PropGuide Explains Occupancy Rate

If a residential development intended for renting has 200 units, and of those 150 have tenants, the occupancy rate is 75 per cent. Similarly, vacancy rate is the total number of apartments that are vacant in a city, as a fraction of the total number of apartment units that are part of the rental stock.

One of the key reasons why occupancy rate is low in Indian cities is because residential rental yield in India is relatively low. The 7th Central Pay Commission revision report proposes to raise housing rent allowance (HRS) for central government employees. This is more likely to raise rents, along the occupancy rate of apartments in the Indian cities. The government is also planning to revise norms governing renting that are currently skewed in favour of tenants.

Currently, rents are artificially kept low in Indian cities. Landlords also find it more difficult to evict tenants. If this happens, occupancy rate will significantly rise.

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