Chennai: Rental yields in top cities have gone up 5 to 10 per cent on an annual basis in the first quarter of 2024. On average, rental yields are around 20 per cent higher than pre-pandemic times.
In the prominent localities of the top 7 cities, there has been an average jump of 4-9 per cent in residential rents in Q1 2024. The typical annual increase in rental yields has been 5-10 per cent.
Residential rental values in India’s top cities have resurged tremendously after the pandemic, with 2023 seeing some of them soaring by over 30 per cent. 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.
Residential rental yields in India had chronically stagnated before the Covid-19 pandemic with the national average at just 3 per cent for many years,” said Santhosh Kumar, vice chairman of 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 said.
IT-dominated Bengaluru tops the list with a rental yield of 4.45 per cent in Q1 2024. Backed by strong post-pandemic rental demand, rental values in the city's key areas have been rising inexorably after IT companies' return to the office. Bengaluru’s rental yield in pre-Covid 2019 stood at 3.6 per cent, which amounts to a growth of 24 per cent in this period.
Mumbai comes next among the top cities with a rental yield of 4.15 per cent in Q1 2024 as against 3.5 per cent back in 2019 – a 19 per cent growth. Gurugram is close behind with a rental yield of 4.1 per cent in the last quarter against 3.5 per cent in 2019.
"Going by the current momentum, there are no immediate prospects of the rental inflation trend slowing down. 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," said Kumar.
