Residential rental demand has soared in most cities ever since offices and schools reopened after the 3rd Covid-19 wave in 2022, especially in the past one year .Particularly , the country’s IT/ITeS capital Bengaluru has seen skyrocketing rental values. Anarock’s analysis of monthly rents across prominent areas of the top 7 cities finds that Bengaluru’s Thanisandra Main Road and Marathahalli-ORR saw residential rental values zoom up by 24% each between Q1 2022 and Q1 2023.
Average monthly rentals for a standard 2BHK home of 1,000 sq. ft. at Thanisandra Main Road increased from INR 21,000/month in Q1 2022 to INR 26,000/month in 2023. At Marathahalli-ORR, average monthly rentals increased from INR 22,500/month last year to INR 28,000/month in Q1 2023.Interestingly, the next two hotspots were also in Bengaluru. Whitefield – another prominent IT/ITeS destination – witnessed the 2nd-best rental value growth of 21% in this period, against all prominent localities in the top 7 cities of India.In Whitefield, the average rents stood at INR 21,900/month in Q1 2022 and in Q1 2023, had reached INR 26,500/month.The third spot was occupied by Bengaluru’s Sarjapur Road, which recorded rental value growth of 20% between first quarter of 2022 and 2023. Here, the average rentals were INR 22,500/month in Q1 2022 and INR 27,000/month in Q1 2023.
Prashant Thakur , Senior Director & head Research, Anarock Group anticipates residential rental values in the IT capital’s prominent markets to rise further by anywhere between 5-12% in 2023, depending on the location, property, builder-type and other aspects. He adds that with limited supply and high demand, the rents could easily rise beyond 12%.
| Avg. Monthly Rentals for standard 2BHK of 1,000 Sq. ft. home (INR/Month) | ||||
| Cities | Micro Markets | Q1 2022 | Q1 2023 | % Change (Q1 2022 vs Q1 2023) |
| Hyderabad | HITECH City | 24,000 | 26,800 | 12% |
| Gachibowli | 23,000 | 25,600 | 11% | |
| Kondapur | 21,500 | 24,000 | 12% | |
| NCR | Sohna Road | 26,000 | 29,500 | 13% |
| Sector-150 (Noida) | 16,500 | 19,000 | 15% | |
| Dwarka | 20,000 | 22,000 | 10% | |
| MMR | Chembur | 49,500 | 58,000 | 17% |
| Mulund | 40,000 | 45,400 | 14% | |
| Ghodbunder road – Thane | 28,000 | 32,000 | 14% | |
| Kolkata | EM Bypass | 19,500 | 22,000 | 13% |
| Rajarhat | 15,000 | 16,500 | 10% | |
| Joka | 13,500 | 15,000 | 11% | |
| Bengaluru | Sarjapur Rd (excluding Sarjapur Village) | 22,500 | 27,000 | 20% |
| Marathahalli-ORR | 22,500 | 28,000 | 24% | |
| Whitefield | 21,900 | 26,500 | 21% | |
| Thanisandra Main Rd | 21,000 | 26,000 | 24% | |
| Pune | Hinjewadi | 18,500 | 22,000 | 19% |
| Wagholi | 15,000 | 17,000 | 13% | |
| Baner | 20,000 | 23,000 | 15% | |
| Chennai | Perambur | 16,800 | 18,500 | 10% |
| Pallavaram | 15,500 | 18,000 | 16% | |
| Oragadam | 12,200 | 13,500 | 11% | |
Source: ANAROCK Research
Top Rental Markets – City-wise
Besides the prominent localities in Bengaluru, other cities also recorded notable rental values growth:
- Pune’s three standout markets with high rental growth between Q1 2022 and Q1 2023 are Hinjewadi, Baner and Wagholi, which witnessed rental value growth of 19%, 15% and 13%, respectively
- In Chennai, the top 3 markets to witness high rental values growth are Pallavaram, Perambur and Oragadam, with rents in this period growing by 16%, 10% and 11% respectively
- In NCR, the top 3 markets were Sohna Road in Gurugram (rental values increased by 13%), Sector-150 in Noida (15% growth) and Dwarka in Delhi with a rental value growth of 10%
- In MMR, the top 3 markets for rental value growth were Chembur, Ghodbunder Road (Thane) and Mulund, which saw 17%, 14% and 14% growth, respectively
- Kolkata’s top 3 markets with high rental value growth between Q1 2022 and Q1 2023 were EM Bypass, Joka and Rajarhat, where rents rose by 13%, 11% and 10%, respectively
- In Hyderabad, the top 3 markets were HITECH City and Kondapur, which saw rental values increase by 12% each, and Gachibowli with 11% growth
Residential rental yield (the annual rate of return an investor can earn from capital invested in a property) had for long stagnated in India. The national average stood at 3% for the last few years pre-pandemic. However, things began to change with rental demand spiking up post the pandemic in 2022. Among the top 7 cities, Bengaluru has the highest rental yield of 4.1% as of Q1 2023-end, followed by Mumbai with 3.9%. Pre-Covid, the rental yield in Bengaluru was at 3.6% – the highest back then, as well.
Rental demand outstripped supply to push residental rents, According to Magicbricks Rental Housing Index (January-March 2023) , rental demand surged 7.3% QoQ and 3.3% YoY. While 2BHKs continued to be the most preferred rental properties, the demand for 3 BHKs grew by almost 6% Q0Q, indicating an increasing preference for spacious homes. The pan-India rental housing availability declined 5.7% QoQ and 17.8% YoY . According to Sudhir Pai, CEO, Magicbricks, the rental housing market is demonstrating buoyant revival and macroeconomic trends affirm that there will be sustained growth trajectory for the rental housing market.
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