City-wise increase in housing rent in 2022-23: With the increasing demand for rental property post-pandemic, the average amount of rent across India’s top cities has jumped significantly since the last year. According to ANAROCK Research, 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 year and particularly in the country’s IT/ITeS capital Bengaluru, which has seen skyrocketing rental values.
The analysis of monthly rents across prominent areas of the top 7 cities (Delhi-NCR, Hyderabad, Chennai, Kolkata, Mumbai, Bengaluru, Pune) by Anarock Research has found that Bengaluru’s Thanisandra Main Road and Marathahalli-ORR saw residential rental values zoom up by 24% each between Q1 2022 and Q1 2023.
The average monthly rentals for a standard 2BHK home of 1,000 sq. ft. at Thanisandra Main Road increased from Rs 21,000/month in Q1 2022 to Rs 26,000/month in 2023. At Marathahalli-ORR, the average monthly rentals increased from Rs 22,500/month last year to Rs 28,000/month in Q1 2023.
Bengaluru’s Whitefield witnessed the second-best rental value growth of 21% in this period, against all prominent localities in the top 7 cities of India. In Whitefield, the average rent stood at Rs 21,900/month in Q1 2022 and in Q1 2023 it reached Rs 26,500/month.
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Bengaluru’s Sarjapur Road recorded rental value growth of 20% between the first quarter of 2022 and 2023. The average rentals in Sarjapur Road were Rs 22,500/month in Q1 2022 and Rs 27,000/month in Q1 2023.
City-wise Increase in Housing Rents In 1 Year
Commenting on the increasing rent across cities, Prashant Thakur, Sr. Director and Head of Research at ANAROCK Group, said, “When it comes to rental demand and zooming rents, Bengaluru currently stands out among the top 7 cities, with East and North Bengaluru the biggest blips on the rental radar map owing to the IT/ITeS belt there. Whitefield, Sarjapur Road, Marathahalli-Bellandur Outer Ring Road, Thanisandra Main Road and even Hebbal are the clear chartbusters.”
“We anticipate 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 added.
Thakur expects that in housing societies with limited supply but high demand, the rents could easily rise beyond 12%.
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Rental Yield
The national average of residential rental yield, which is the annual rate of return an investor can earn from capital invested in a property, 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%, according to the report.