Anarock Property Consultants Pvt’s data shows that in the first quarter of 2023, Bengaluru’s main areas have witnessed a year-on-year increase of more than 20% in housing rents.
The consultancy firm examined the monthly rents in significant regions of the seven leading cities, namely Hyderabad, the National Capital Region, Mumbai Metropolitan Region, Kolkata, Bengaluru, Pune, and Chennai.
Bengaluru
Anarock reports that in the seven mentioned cities, two areas in Bengaluru, namely Thanisandra Main Road and Marathahalli-ORR, have experienced a 24% increase in residential rental values between Q1 2022 and Q1 2023.
Whitefield saw the second-highest growth in rental value at 21% during the same period.
Explaining the increase
According to Abhishek Tripathi, the co-founder of Settl, significant investments were made in hiring talent, particularly in the IT sector and startups, in cities like Bangalore during the pandemic.
Simultaneously, the scarcity of labor during the pandemic restricted the increase in building supply.
As soon as the lockdown restrictions eased and offices resumed operations, people began migrating to tier-I cities and settling down.
The imbalance between the demand and supply of housing has led to a housing crisis in tier 1 cities like Bangalore, which is why there has been a significant increase in rental rates.
This surge in rental rates is a consequence of several factors.
Forecasts
Among the top seven cities, Bengaluru currently stands out in terms of rental demand and surging rents.
Prashant Thakur, Senior Director and Head of Research at Anarock, has stated that he expects residential rental values in the prominent markets of Bengaluru to increase by 5-12% in 2023, depending on various factors like location, property, builder-type, and more.
He further added that rents could rise beyond 12% in housing societies that have limited supply but high demand.
Since the reopening of offices and schools following the pandemic, the demand for residential rentals has significantly increased.
As a result, several cities have also witnessed noteworthy growth in rental values.
Pune, MMR
Following the regions in Bengaluru mentioned above, Hinjewadi in Pune had the next highest rental growth at 19%.
The top three standout markets with high rental growth after that were Baner, Wagholi, with rental value growth of 19%, 15%, and 13%, respectively.
The three regions in MMR with the highest rental value growth were Chembur, Ghodbunder Road (Thane), and Mulund, which experienced growth of 17%, 14%, and 14%, respectively.
Delhi
Sector 150 in Noida witnessed a rental value growth of up to 15% in NCR.
Other key markets include Sohna Road in Gurugram (rental values increased by 13 percent), and Dwarka in Delhi with a rental value growth of 10 percent.
Chennai
Pallavaram in Chennai recorded a growth of up to 16% in rental value.
Other notable areas in Chennai with high rental value growth are Perambur and Oragadam, where rental values increased by 10% and 11%, respectively, during the same period.
Kolkata
The top three markets in Kolkata that experienced high rental value growth from Q1 2022 to Q1 2023 were EM Bypass, Joka, and Rajarhat.
During this period, rents in these areas increased by 13 percent, 11 percent, and 10 percent, respectively.
Hyderabad
The three key markets in Hyderabad that witnessed significant growth in rental values between Q1 2022 and Q1 2023 were HITECH City, Kondapur, and Gachibowli, with rental value increases of 12%, 12%, and 11%, respectively.
Rental Yields
As of Q1 2023, Bengaluru holds the highest rental yield among the top seven cities, standing at 4.1%, followed by Mumbai at 3.9%.
Rental yield is the annual rate of return an investor earns from capital invested in a property.
Prior to the pandemic, the national average rental yield was 3%. Bengaluru’s rental yield pre-Covid was 3.6%, which was also the highest at that time.
