In the first quarter of 2024, Bengaluru emerged as the leader in terms of rental yield, data from property consulting firm Anarock said.
Anarock reveals that India’s Silicon Valley – Bengaluru – boasted a rental yield of 4.45% in the first quarter of 2024. This represents a significant 24% increase compared to pre-pandemic levels in 2019 (3.6%).
Prominent localities like Sarjapur Road and Whitefield experienced an impressive 8% increase in average monthly rent for a standard 2 BHK flat between Q4 2023 and Q1 2024.
This growth is even more striking when compared to 2022, with some top Bengaluru localities witnessing a staggering hike of 40% or more in rents, the report said.
“Backed by strong post-pandemic rental demand, rental values in the city’s key areas have been rising inexorably after IT companies’ return to office call,” noted Anarock.
As per the Anarock data, there has been a nationwide uptick in rental yields. Cities like Pune, Noida, Delhi, Navi Mumbai, and Thane have all seen improvements in their rental yield compared to pre-pandemic times.
Santhosh Kumar, Vice Chairman of ANAROCK attributed this trend to chronically stagnant yields prior to the pandemic, which hovered around a national average of just 3% for many years.
The Vice Chairman further said, “In the prominent localities of the top 7 cities, there has been an average jump of 4-9% jump in residential rents between in Q1 2024. Considering that the typical annual increase is 5-10%, this is very significant and while it certainly bodes well for landlords, it signifies a worrisome element of cost-of-living inflation for tenants.”
The post-pandemic surge in rental demand, particularly in IT-dominated cities, has finally pushed yields upwards.
India’s top cities witnessed a significant rebound in rental values during 2023, with year-on-year growth exceeding 30%. While the last quarter of 2023 saw a temporary stabilization due to seasonal trends, the momentum picked up again in Q1 2024.
In NCR, Noida’s Sector 150 saw average rents rise by 9%, and by Delhi’s Dwarka by 6%. In Mumbai, Chembur and Mulund saw 4% growth each in rental rates. In Chembur, the avg. rental rates in Q1 2024 stood at approx. Rs 62,500/month as against Rs 60,000/month back in Q4 2023.
Kolkata’s Rajarhat saw the lowest increase (3%) in the period – from approx Rs 18,500/month in Q4 2023 to approx Rs 19,000/month in Q1 2024.
In both Chennai and Mumbai, rents rose by a more sedate 4% while in Hyderabad, prominent localities like HITECH City and Gachibowli saw rents rise by 5% each in the quarter.