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Business Economy

At 4.45 pc Bengaluru's Rental Yield highest in Q1 2024

Hyderabad, April 29 (UNI) With a steep rise in rental housing demand in the top cities, average rental values have soared and rental yields - the annual ROI investors earn from capital invested in a property - have been heading steadily north, according to the latest ANAROCK data.
The data indicated that as before, IT-dominated Bengaluru tops the list with a rental yield of 4.45 per cent in Q1 2024.
Mumbai comes next among the top cities with a rental yield of 4.15 percent in Q1 2024 as against 3.5 percent back in 2019 – a 19 per cent growth.
Gurugram is close behind with a rental yield of 4.1% in the last quarter against 3.5 per cent in 2019.
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.
Bengaluru’s rental yield in pre-Covid 2019 stood at 3.6 percent, which amounts to a growth of 24 per cent in this period.
Residential rental yields in India had chronically stagnated before the Covid-19 pandemic, with the national average at just 3% for many years,” said Santhosh Kumar, Vice Chairman – ANAROCK Group. “With post-pandemic rental demand soaring after offices resumed, rental yields are heading north too. IT-dominated cities including Bengaluru, Gurugram, Pune and Noida, and also MMR, have seen considerable upticks in their rental values, and therefore yields,” he added.
Residential rental values in India’s top cities have resurged tremendously after the pandemic, with 2023 seeing them soar by over 30 per cent y-o-y.
In the last quarter of 2023, rental values stabilized in most cities as renting activity usually abates in the last quarter of the year. However, the rental real estate market picked up momentum again in the first quarter of 2024, the Data revealed.
In the prominent localities of the top 7 cities – Bengaluru, Hyderabad, Pune, NCR, MMR, Kolkata and Chennai --, there has been an average jump of 4-9 per cent in residential rents between in Q1 2024. Considering that the typical annual increase is 5-10 per cent, this is very significant and while it certainly bodes well for landlords, it signifies a worrisome element of cost-of-living inflation for tenants.
A comparison of rental values between 2022-end and Q1 2024 shows that top localities in Bengaluru saw a staggering hike of 40 percent and above.
The trend is not limited to Bengaluru; other key cities have also witnessed rental values inflation, though not to the magnitude seen in Bengaluru.
In NCR, Noida’s Sector 150 saw average rents rise by 9 percent, and Delhi's Dwarka by 6 percent.
In Mumbai, Chembur and Mulund saw 4 percent growth each in rental rates. In Chembur, the average rental rates in Q1 2024 stood at around INR 62,500/month as against INR 60,000/month back in Q4 2023.
Kolkata’s Rajarhat saw the lowest increase (3%) in the period – from around INR 18,500/month in Q4 2023 to around INR 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.
Going by the current momentum, there are no immediate prospects of the rental inflation trend slowing down," said Santhosh Kumar.
"In fact, it is expected to pick up in the next few quarters, as rental activity typically remains high in the first two quarters of a fiscal year," he added.
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