Bengaluru’s Paying Guest Crisis: Over 200 PGs Shut Down, Owners Facing 20-30% Losses
Bengaluru, known as India’s tech capital, is grappling with a growing crisis in the paying guest (PG) accommodation sector. Recent reports indicate that more than 200 PGs have closed their doors due to the Bruhat Bengaluru Mahanagara Palike (BBMP) enforcing stringent regulations. This upheaval has left property owners with staggering losses, ranging between 20% to 30%. But what led to this dramatic shift?
The Changing Landscape of PG Accommodations in Bengaluru
A Shift in Regulations
The BBMP implemented new rules under Section 305 of the BBMP Act, 2020, aimed at controlling the PG sector in the city. As per Sukhi Seo, secretary of the Bengaluru PG Owners’ Association, the measures have made it challenging for many PG operators who previously thrived without much oversight.
Key Regulations Imposed
- Mandatory Surveillance: All PGs must now equip their premises with CCTV cameras to monitor entry and exit points, as well as common areas.
- Space Requirements: Each resident must have a minimum living space of 70 square feet to qualify for a license.
- Water Supply Standards: PG operators are mandated to provide at least 135 litres of clean water daily per person.
- Food Safety Compliance: Establishments offering meals must obtain a license from the Food Safety and Standards Authority of India (FSSAI).
Financial Repercussions: PG Owners Left in the Lurch
The impact of these regulations has been swift and severe. Many PG owners have noted a drastic decline in their profits, with most reporting losses of 20-30% compared to previous years.
Kiran Kumar, vice president of Hanu Reddy Realty, explains that while the typical return on investment in the PG sector averages 6-8%, current conditions have shifted the landscape.
Market Dynamics
In prime locations, rents per bed can range from ₹8,000 to ₹10,000, while double-sharing accommodations may cost between ₹10,000-15,000. However, raising rents has become a double-edged sword: if owners increase prices too high, tenants are likely to flee, leaving owners to foot the bill for increased operational costs stemming from rising water rates and taxes.
The Widening Gap: Compliance vs. Illegality
Currently, while approximately 2,500 PGs are certified in Bengaluru, an alarming 10,000+ PGs operate without proper licenses. This non-compliance is troubling for investors, as the BBMP has the authority to conduct raids at any moment.
Seo expressed concern over these illegal operations, stating, "The PG business, once seen as a lucrative investment opportunity, is now struggling to stay afloat."
Experts Weigh In: A Chaotic Sector
Civic experts are raising alarms about the growing irregularities in Bengaluru’s PG accommodations, labeling the sector as increasingly problematic and poorly regulated.
The Call for Regulatory Action
Sandeep Anirudhan, convenor of the Coalition for Water Security, highlighted that many PG operators disregard construction bylaws and collaborate with real estate brokers for aggressive marketing. “In prime areas like Whitefield, many PGs often have double the approved number of floors," he noted. This not only stresses local infrastructure but also results in congestion and unapproved commercial ventures, deteriorating the quality of planned neighborhoods.
Anirudhan argued, “The existing laws need strict enforcement, and the government must act decisively to regulate the PG sector.”
Conclusion: A Need for Balanced Regulation
As Bengaluru navigates this crisis, both PG owners and civic authorities must find common ground to establish a healthy ecosystem for accommodation. It’s crucial for the BBMP to enforce regulations thoughtfully while allowing legitimate businesses to thrive. Only through collaborative efforts can Bengaluru’s PG sector regain stability and continue to support the city’s vibrant economy.
For more on the evolving landscape of Bengaluru’s real estate, check out updates from Hindustan Times.
