The prime areas in Bengaluru saw a huge 31 per cent surge in rent in the first nine months of 2023. In fact, though residential rents shot up in all the top 7 cities in India, it was more pronounced in the IT/ITeS hubs. After Bengaluru, Hyderabad and Pune took the second and third spot in terms of rental surges, respectively, according to a recent study by Anarock Group.
In Bengaluru’s Whitefield locality, a standard 2BHK flat of approximately 1,000 sq. ft. saw rents surge by a huge 31 per cent during this nine-month period. The average monthly rent for such properties increased from Rs 24,600 per month at the end of 2022 to Rs 28,500 per month by September-end 2023, the report said.
Hyderabad is the second rental growth hotspot, recording up to a 24 per cent surge in Gachibowli. Notably, the HITECH City of Hyderabad saw average rents spike from Rs 24,600 per month to Rs 28,500 per month during this period.
Pune, also another IT hotspot, experienced substantial rental value growth, particularly in the Hinjewadi micro-market, where rents shot up by 17 per cent, and in Wagholi where they soared 18 per cent.
Says Anuj Puri, chairman, Anarock Group: “After an almost terminal downturn during the first and second Covid-19 waves, residential rents soared by over 30 per cent in the top 7 cities. All three leaders for rental values growth are also IT/ITeS centric cities shows the fundamental strength of the Indian Infotech sector, despite belt-tightening moves in the industry.”
However Puri anticipates a stabilisation of rental values in most cities in the ongoing quarter, as renting usually remains low in the last quarter of the year. He says a resurgence is likely in the January to March period, coinciding with increased hiring and relocation by Indians in the new financial year.
In the National Capital Region (NCR), hotspots witnessed a notable growth of 11-14 per cent, while they grew in the range of 9-14 per cent in the Mumbai Metropolitan Region (MMR) and 9-12 per cent in Chennai.
According to the report, residential rental yield, which represents the annual return from capital invested in a property – has never been spectacular in India. Before the pandemic, the national average stood at 3 per cent. However, with rental demand picking up after Covid-19 in 2022, there has been a considerable change.
As of September 2023, Bengaluru leads with the highest rental yield at 4.35 per cent, against pre-Covid-19 days of 3.6 per cent. The current rental yield in Mumbai is at 4.05 per cent.
