Real Estate

Rent Skyrockets Across India's Top 7 Cities In Q 1 2024, Bengaluru Sees 8% Hike: ANAROCK Report

Bengaluru leads the list of cities that saw rents surge, with rents rising around 8 per cent in select areas, while rental yields in the city touched 4.45 per cent.

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Rent Skyrockets Across India's Top 7 Cities In Q 1 2024
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A huge 8 per cent surge in rent was seen in Bengaluru's prime areas in the first quarter of 2024 said real estate consultant ANAROCK's report, according to which residential rental values shot up in all top 7 cities.

The trend is not limited to IT-dominated Bengaluru with a rental yield of 4.45 per cent in Q1 2024 but other cities have not witnessed a surge like that of the magnitude seen in Bengaluru.

In the select localities of the top seven cities, an average jump of 4 to 9 per cent jump in residential rents between Q1 2024 was witnessed. Considering that the typical annual increase is only 5 to 10 per cent, the 4 to 9 per cent surge in Q1 2024 is very significant and while it certainly bodes well for landlords.

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In NCR, Noida’s Sector 150 average rents rose by 9 per cent in Q1 2024, and in Delhi's Dwarka by 6 per cent. In Mumbai, Chembur and Mulund saw 4 per cent growth each in rental rates. In Chembur, the average rental rates in Q1 2024 stood at approximately Rs 62,500 per month as against Rs 60,000 per month back in Q4 2023.

The lowest hike in rent was seen in Kolkata’s Rajarhat (3%) from approximately Rs 18,500 per month in Q4 2023 to approximately Rs 19,000 per month in Q1 2024. In both Chennai and Mumbai, rents rose by a more sedate 4 per cent while in Hyderabad, prominent localities like HITECH City and Gachibowli saw rents rise by 5 per cent each in the quarter.

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“Going by the current momentum, there are no immediate prospects of the rental inflation trend slowing down...It is expected to pick up in the next few quarters, as rental activity typically remains high in the first two quarters of as fiscal year. Residential rental yields in India had chronically stagnated before the Covid-19 pandemic, with the national average at just 3 per cent for many years,” says Santhosh Kumar, Vice Chairman – ANAROCK Group.

“With post-pandemic rental demand soaring after offices resumed, rental yields are heading north too. ITdominated cities including Bengaluru, Gurugram, Pune and Noida, and also MMR, have seen considerable upticks in their rental values and therefore yields,” Kumar said

Residential rental values in India’s top cities have soared tremendously since the pandemic, with 2023 seeing them soar by over 30 per cent y-o-y. In the last quarter of 2023, rental values stabilised in most cities as renting activity usually abates in the last quarter of the year, the report said, but this trend saw a reversal in 2024.

Rental Yields

Bengaluru’s rental yield in pre-Covid 2019 stood at 3.6 per cent, which amounts to a growth of 24 per cent in this period. As per ANAROCK data, the average rental values in Sarjapur Road and Whitefield rose by 8 per cent each in Q1 2024 against the previous quarter. In Sarjapur Road, the average monthly rent in Q4 2023 stood at approx. Rs 31,600 for a standard 2 BHK flat of 1,000 sq. ft. – in Q1 2024, it went up to approximately Rs 34,000 per month.

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Similarly, Whitefield saw average monthly rents jump from Rs 30,200 in Q4 2023 to Rs 32,500 in Q1 2024 - an 8 per cent jump. Rental values surged 40 per cent between 2022-end and Q1 2024 in top localities of Bengaluru.

Mumbai comes next after Bengaluru among the top cities with rental yield rising 19 per cent to 4.15 per cent in Q1 2024 from 3.5 per cent back in 2019. Gurugram is close behind with a rental yield of 4.1 per cent in the last quarter up from 3.5 per cent in 2019.

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