Bengaluru has highest rental income in Q1-2024, Anarock Report

Bengaluru emerges as India’s rental powerhouse with a remarkable 4.45% rental yield in Q1 2024, soaring from pre-COVID levels of 3.6% in 2019, driven by the resurgence of IT companies and office spaces.

In the wake of the COVID-19 pandemic, India’s real estate market has witnessed a remarkable resurgence in rental values, particularly in the nation’s premier urban centers. According to recent data released by Anarock, a leading real estate consultancy firm, the demand for rental housing has surged, propelling rental incomes to unprecedented heights. This surge in rental values reflects a significant shift in the post-pandemic landscape, driven primarily by the return of IT companies to office spaces and an uptick in rental demand across various sectors.

Leading the charge is Bengaluru, India’s IT hub, which continues to dominate the rental market with a staggering rental yield of 4.45 per cent in the first quarter of 2024. This figure marks a substantial increase from the pre-COVID levels of 3.6 per cent observed in 2019. The resurgence in rental demand in Bengaluru’s key areas, fuelled by the resurgence of IT companies and their return to physical office spaces, has propelled rental values to unprecedented levels, reaffirming the city’s status as a rental powerhouse.

Following closely behind is Mumbai, India’s financial capital, which boasts a rental yield of 4.15 per cent in 2024, representing a significant growth of 19 per cent compared to 2019 figures. Gurugram, another IT-centric city, is not far behind, with a rental yield of 4.1 per cent, reflecting a similar upward trajectory in rental values. Santhosh Kumar, Vice Chairman of the ANAROCK Group, attributes this rental boom to the post pandemic surge in rental demand, particularly in IT-dominated cities like Bengaluru, Gurugram, Pune, Noida, and Mumbai.

The resurgent rental market, fuelled by the return of offices to full operational capacity, has led to a considerable uptick in rental values, driving rental yields to new highs. The resurgence in rental values is not confined to Bengaluru alone; other key cities have also witnessed a significant inflation in rental rates. In the National Capital Region (NCR), Noida’s Sector 150 witnessed a remarkable 9 per cent increase in average rents, while Delhi’s Dwarka saw a 6 per cent rise. In Mumbai, localities such as Chembur and Mulund experienced a 4 per cent growth in rental rates, signalling a widespread trend of rental inflation across major metropolitan areas.

According to Anarock, the rental market’s momentum shows no signs of slowing down, with expectations of further growth in the coming quarters. The first two quarters of the fiscal year typically witness heightened rental activity, further fuelling the rental inflation trend. The surge in rental values, while beneficial for landlords, poses a significant challenge for tenants, as it translates into a worrisome element of cost-of-living inflation. The average jump of 4-9 per cent in residential rents in the first quarter of 2024, coupled with a stabilizing trend observed in rental values in most cities towards the end of 2023, underscores the growing affordability concerns for tenants across India’s top cities.

In conclusion, India’s real estate market is witnessing a rental renaissance, driven by the resurgence of rental demand and the return of offices to full operational capacity. While landlords rejoice at the prospect of soaring rental incomes, tenants grapple with the challenges posed by escalating rental values and cost-of-living inflation. As the rental market continues to gain momentum, stakeholders must navigate the evolving landscape to ensure a balanced and sustainable rental ecosystem for all.