Steady Growth in Rental Realty

Despite various headwinds including rise in interest rates, all markets in Mumbai have seen steady upward growth in residential and commercial rentals.

The real estate industry in MMR is holding a firm ground with a rapid increase in housing sales and rentals, despite headwinds like increase in interest rates and repo rates in the last quarter. Testament to the market sentiment has been that 13% of micro-markets in MMR witnessed 5%+ CAGR over the last 4 years in the rental housing market, as defined by the MMR Property Rentals Tracker 2022 released by CREDAI-MCHI in collaboration with CRE Matrix. The report also highlights that all of the key localities in MMR have witnessed an increase in housing rentals, out of which 15% of the localities saw 5%+ CAGR, where Balkum witnessed the maximum monthly rate appreciation of 29%.

Despite the unprecedented crisis caused by the pandemic due to the work-from-home culture, layoffs, and economic downturn, the rental housing market in MMR has remained resilient. Commercial rentals also saw an increase in rentals in 87% of the key localities in Mumbai, with maximum monthly rents in BKC Core and Nariman Point being ₹ 277 per square feet and ₹ 245 per square feet, respectively.

In Mumbai, rentals for 5 of the top micro-markets have shown a resilient rise of more than 1.2x as compared to CY 2018, whereas 64% of all the micro-markets, witnessed a double-digit percentage growth in their rentals compared to CY 2018.

 According to Boman Irani, President, CREDAI-MCHI, the real estate industry is currently going through a momentous cycle, and the increase in housing rentals give a ray of optimism to both developers and homebuyers since this will encourage more housing sales in the upcoming months. Rentals have been witnessing an upward trend in major Indian cities as companies have now switched to hybrid working, and schools/colleges have reopened as well.  Overturning a dull scenario created by the effects of the pandemic, via growth in job opportunities, increase in housing sales, and higher demand for larger spaces are some of the factors which are adding to this trend. Homebuyers are now more likely to invest in such properties, given that the ROI would be higher than earlier despite the inflationary conditions.While the residential sector has witnessed immense growth compared to CY 2018, 74% of all the micro-markets in Thane have dominated the region as it observed a double-digit percentage growth in housing rentals. The commercial business has shown signs of improvement as rentals increased in 88% of the Mumbai office market.

The housing prices in MMR, considered the costliest real estate market, saw a 3% increase in monthly rentals on a Y-o-Y basis in average housing rentals of the key localities. Micro-markets like Balkum, Andheri West, Ghansoli, Borivali West and Bandra East have seen the highest monthly rent rise as compared to CY 2018.