The surge in residential rental prices in key micro-markets across top cities has significantly slowed, with average rental growth dropping from 4-9 per cent in Q1 2024 to 2-4 per cent in Q2 2024, according to the latest Anarock data. This deceleration is attributed to a substantial increase in housing supply entering the markets.
Santhosh Kumar, Vice Chairman of Anarock Group, noted that the second quarter typically sees higher rental increases due to the new academic year and employment cycles. However, this year's slowdown in rental growth aligns with the influx of new housing units.
Approximately 5.31 lakh new units are expected to be completed in the top 7 cities in 2024, marking a 22 per cent increase from the 4.35 lakh units completed in 2023. Notable micro-markets experiencing rental growth include Bengaluru’s Whitefield and Noida’s Sector 150, both witnessing a 4 per cent quarterly rise in Q2 2024. Other areas like Sohna Road and Dwarka in NCR, and Chembur and Mulund in MMR, saw more modest increases of 2-3 per cent.
For example, average rents for a 1,000 sq.ft. 2 BHK in Bengaluru’s Whitefield increased by 4 per cent from INR 32,500/month in Q1 2024 to INR 35,000/month in Q2 2024. Similarly, Noida’s Sector 150 saw a rise from INR 24,000/month to INR 25,000/month over the same period. However, these figures reflect a sharp decline from the previous quarter's growth rates.
The Mumbai Metropolitan Region (MMR) is expected to see the highest number of completions, with approximately 1.61 lakh units in 2024, up from 1.43 lakh units in 2023. The National Capital Region (NCR) follows with an expected 1.44 lakh units, a significant increase from 1.14 lakh units in 2023. Pune, another key market, is set to complete 97,000 units, up from 65,000 units in 2023.
Other cities like Hyderabad, Kolkata, and Chennai also show substantial increases in completions. Hyderabad is expected to complete 34,770 units in 2024, a significant jump from 20,500 units in 2023. Kolkata is projected to see 25,220 units completed, while Chennai will see 17,580 units delivered in 2024.
This surge in new housing supply is not only stabilising rental prices but is also expected to enhance the overall residential market by improving affordability and availability. The increased supply will likely continue to moderate rental growth, benefiting both tenants and the broader housing market.
