×

Bengaluru Steals the Show

Torbit - April 30, 2023 - - 0 |
Bengaluru Steals the Show

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.

 

Leave a Reply