Rental Hotspots See Double- Digit Growth

After two years of weak rental demand during Corona pandemic due to working from home, the rental housing market saw robust growth in 2022 with the resumption of offices. As employees returned back from their hometowns to the cities of their employment,  some residential hotspots registered double-digit growth. And as the things stand, the year 2023 holds promise for rental demand and growth.

Average monthly residential rentals in the top 7 cities in both the luxury and the mid segment categories, were on a roll in 2022. The latest Anarock data shows that the key residential rental hotspots saw up to 23% growth in average monthly rentals between 2019 and 2022. Noida’s Sector-150 remained on top with monthly rentals for a standard 1,000 sq. ft. flat at approximately Rs 19,000/month, from Rs 15,500/month in 2019. Pune’s prominent micro-markets Hinjewadi and Wagholi saw average monthly rentals for a standard 1,000 sq. ft. home go up by 20% and 21% respectively in this period. Bengaluru’s Whitefield recorded nearly 18% average rental growth – from Rs 19,000/month in 2019 to Rs 22,500/month in 2022.

While prominent localities with high rental demand saw double-digit rental growth between 2019 and 2022, Hyderabad was a notable exception. Key areas like Gachibowli and HITECH City recorded single-digit growth of 6% and 7%, respectively. Mulund in MMR also saw just 6% growth in residential rentals in this period.

As things stand now, rental demand will continue to head northward in 2023. According to Anuj Puri, Chairman, Anarock, the surge in rentals is driven by resurging demand on the back of most offices re-establishing normal operations. Employees returning from their hometowns or other parts of the city tend to rent homes for at least the short-term, often to consider purchases at a later stage. As both property prices and interest rates continue to rise, the overall cost of property acquisition is increasing, leading to an increase in deferred property purchase decisions. Resultantly, the demand for rental homes is on the increase. Also, with the approaching new academic session, more parents will look to locate their family close to schools, leading to a further hike in rental demand in the coming months.

Surge in  Rentals in Top Luxury Housing Markets

As per the latest Anarock data, the average monthly rentals in the prominent luxury micro-markets of the top 7 cities increased by anywhere between 7-18% in 2022 over 2019 for homes of over 2000 sq ft.. NCR’s Golf Course Extension saw highest growth from Rs 49000 per month in 2019 to 58000 per month in 2022.

Source: ANAROCK Research

• NCR’s Golf Course Extension saw the highest growth of 18% – from INR 49,000/month in 2019 to INR 58,000/month in 2022 for luxury homes of approx. 2,000 sq. ft. area.
• Hyderabad’s Jubilee Hills witnessed a 17% jump in the same period – from INR 54,000/month in 2019 to INR 63,000/month in 2022.
• Mumbai’s Worli saw rental growth of 16% in the period – from INR 2.05 lakh per month in 2019 to INR 2.38 lakh per month in 2022.
• Bengaluru’s Rajaji Nagar also saw 16% growth in average monthly rental values for luxury homes – from INR 56,000/month in 2019 to INR 65,000/month in 2022.
•  Anna Nagar, Chennai saw average luxury rentals rising from INR 55,000/month in 2019 to INR 64,000/month in 2022 – another 16% jump.

As the things stand today, the rental demand will continue to head northward in 2023.