IT Hubs Lead As Home Rents Rises 31% In Top 7 Cities: Report
Housing rents continue to soar across the top 7 cities, led by leading IT/ITeS hubs Bengaluru, Hyderabad, and Pune. Latest ANAROCK Research data reveals that among the top 7 cities, residential rentals in Bengaluru’s prominent areas soared by over 30 per cent in the first nine months of 2023 (9M 2023).
A standard 2BHK flat of approx. 1,000 sq. ft. area in Bengaluru’s Whitefield saw rents grow by 31 per cent in 9M 2023, followed by Sarjapur Road where rents for such homes rose by 27 per cent in this period.
In hard numbers, the average monthly rent for a standard 2BHK home of 1,000 sq. ft. at Whitefield increased from INR 24,600/month by 2022-end to INR 28,500/month by September-end 2023. At Sarjapur Road, average monthly rents increased from INR 24,000/month in 2022-end to INR 30,500/month in September 2023.
Interestingly, the next two rental growth hotspots are also IT/ITeS hubs. Hyderabad witnessed the 2nd-best rental value growth with key markets in the city seeing up to 24 per cent growth in this period against all prominent localities in the top 7 cities of India.
In HITECH City, the average rents stood at Rs 24,600/month by 2022-end; by the end of Q3 2023, they were Rs 28,500/month - a 16 per cent growth in the nine-month period. Gachibowli saw rents zoom up by 24% in the same period – from INR 23,400/month by 2022-end to INR 29,000/month by September-end this year.
The third prominent city to see good rental value growth was Pune, where the Hinjewadi micro-market recorded a rental value growth of 17 per cent in the last nine months. Here, the average rents were Rs 21,000/month by 2022-end and INR 24,500/month by September-end 2023.
Anuj Puri, Chairman – Anaorck Group, says, “After an almost terminal downturn during the first and second Covid-19 waves, residential rents are one of the most remarkable comeback stories of the post-pandemic housing sector. The first nine months of 2023 saw housing rents soar by over 30% in the top 7 cities. Bengaluru, already in the limelight for its astronomic rental values post-Covid-19, continues to stand out among the top 7 cities. The fact that the next two hotspots for rental values growth are also IT/ITeS-centric cities also underscores the fundamental strength of the Indian Infotech sector, despite belt-tightening moves in the industry.”
However, we may now see rental values begin to stabilize in most cities in the ongoing quarter as renting usually remains low in the last quarter of the year, says Puri. “Rents will once again build up steam when renting picks in the January to March period,” he says. “This is when Indians usually relocate for better job opportunities amid increased hiring in the new financial year.”
Top Rental Markets
Besides Bengaluru, other cities also recorded notable rental values growth in their prominent localities:
Rental Yields
Residential rental yield - the annual ROI from capital invested in a property – has never been spectacular in India. The national average of three per cent for the last few years before the pandemic was more or less par for the course. However, with rental demand picking up after Covid-19 in 2022, there has been a considerable change – one of the main reasons why investors are back on the housing market.
Among the top seven cities, Bengaluru has the highest rental yield of 4.35 per cent as of September 2023-end, followed by Mumbai with 4.05 per cent. Pre-Covid in 2019, the rental yield in Bengaluru was at 3.6 per cent - the highest back then, as well.
