Soaring rents! 16% on-year surge in rents across major cities; Greater Noida, Gurugram lead

Things are set to get challenging for tenants as rents continue to increase on-quarter as well as on-year. There has been a 16 per cent on-year surge in rents across 13 major Indian cities, with some increasing as much as over 30 per cent. 

According to Magicbricks’ latest flagship Rental Update (January-March 2024), rents in Greater Noida, Gurugram, Bengaluru and Hyderabad soared 32.1 per cent, 24.5 per cent, 23.7 per cent, and 22.9 per cent on-year. The report also revealed that rents increased 2.8 per cent on-quarter following an increase of 1.6 per cent on-quarter between October and December 2023. 

Rents in Ahmedabad increased the least among the 13 major cities at 8.3 per cent, while in Chennai it increased 18.9 per cent, Delhi 14.2 per cent, Kolkata 13.3 per cent, Mumbai 12.3 per cent, Navi Mumbai 18.2 per cent, Noida 19.3 per cent, Pune 14.6 per cent, and Thane 17.7 per cent on-year.

Meanwhile, on a quarter-to-quarter basis, except for Thane, rents in all the major 12 cities increased. Rents in Thane saw a -0.6 per cent dip, while it increased the highest in Hyderabad at 6.8 per cent, and Chennai and Navi Mumbai each at 5 per cent on-quarter. Bengaluru rents increased 4.4 per cent on-quarter. 

Demand for rental units have also gone up in the 13 major cities, with Chennai seeing the highest increase at 24.9 per cent, followed by Noida at 20.1 per cent, Noida 19.2 per cent, and Hyderabad 18.5 per cent quarter-on-quarter. Overall demand has gone up 16 per cent on-quarter. 

However, quarterly demand for rental units have gone down by -5.7 per cent, with all of the 13 major cities except for Ahmedabad (5.3 per cent) and Chennai (10.1 per cent) seeing a dip. The biggest fall in demand on-year was witnessed by Gurugram at -15.9 per cent on-quarter, followed by Pune (-12.3 per cent), Noida (-11.3 per cent), and Bengaluru (-11.2 per cent). 

 "Prior to 2020, residential rental yields in India were averaging around 3 per cent. However, since 2022, following the resumption of office operations, we've witnessed a notable surge in rental demand, consequently driving up rents and offering higher yields to landlords. We anticipate this upward trend in rents to persist over the next few months, particularly as rental activity typically peaks in the first two quarters of the fiscal year. Notably, residential and IT hubs like Bengaluru, Gurugram, Hyderabad and Noida have experienced significant increases in their rental yields, in line with our expectations,” said Abhishek Bhadra, Head of Research, Magicbricks. 

The dominant segment in demand for rental accommodation – that accounted fo 42 per cent – was for the Rs 10,0000-30,0000 budget range.