Bengaluru’s Key Areas See Housing Rents Grow Over 20% Y-o-Y in Q1 2023, Beat Other Cities

 

  • Thanisandra Main Rd & Marathahalli-ORR in Bengaluru record highest residential rental growth of 24% each on yearly basis in Q1 2023 (for a standard 2BHK home of 1,000 sq. ft. area)
  • Whitefield (Bengaluru) records 2nd best rental rate jump against other prominent areas of top 7 cities, sees 21% growth
  • Bengaluru’s Sarjapur Road comes next with 20% in avg. monthly rent growth b/w Q1 2022 & Q1 2023
  • Largely, areas in East & North Bengaluru have seen a spurt in rental demand
  • At 4.1%, Bengaluru currently has the highest rental yield as of Q1 2023-end among all major cities, followed by Mumbai with 3.9%
  • Residential rents in prominent markets in Bengaluru may rise further by between 5-12% in remaining 3 quarters of 2023

 

Residential rental demand has soared in most cities ever since offices and schools reopened after the 3rd Covid-19 wave in 2022, especially in the past one year and particularly in the country’s IT/ITeS capital Bengaluru – which has seen skyrocketing rental values. ANAROCK’s analysis of monthly rents across prominent areas of the top 7 cities finds that Bengaluru’s Thanisandra Main Road and Marathahalli-ORR saw residential rental values zoom up by 24% each between Q1 2022 and Q1 2023.

 

Average monthly rentals for a standard 2BHK home of 1,000 sq. ft. at Thanisandra Main Road increased from INR 21,000/month in Q1 2022 to INR 26,000/month in 2023. At Marathahalli-ORR, average monthly rentals increased from INR 22,500/month last year to INR 28,000/month in Q1 2023.

 

Interestingly, the next two hotspots were also in Bengaluru. Whitefield – another prominent IT/ITeS destination – witnessed the 2nd-best rental value growth of 21% in this period, against all prominent localities in the top 7 cities of India.

In Whitefield, the average rents stood at INR 21,900/month in Q1 2022 and in Q1 2023, had reached INR 26,500/month.

 

The third spot was occupied by Bengaluru’s Sarjapur Road, which recorded rental value growth of 20% between first quarter of 2022 and 2023. Here, the average rentals were INR 22,500/month in Q1 2022 and INR 27,000/month in Q1 2023.

 

Prashant Thakur, Sr. Director & Head – Research, ANAROCK Group, says, “When it comes to rental demand and zooming rents, Bengaluru currently stands out among the top 7 cities, with East and North Bengaluru the biggest blips on the rental radar map owing to the IT/ITeS belt there. Whitefield, Sarjapur Road, Marathahalli-Bellandur Outer Ring Road, Thanisandra Main Road and even Hebbal are the clear chartbusters.”

 

“We anticipate residential rental values in the IT capital’s prominent markets to rise further by anywhere between 5-12% in 2023, depending on the location, property, builder-type and other aspects,” says Thakur. “In housing societies with limited supply but high demand, the rents could easily rise beyond 12%.”

 

Avg. Monthly Rentals for standard 2BHK of 1,000 Sq. ft. home (INR/Month)

Cities

Micro Markets

Q1 2022

Q1 2023

% Change (Q1 2022 vs Q1 2023)

Hyderabad

HITECH City

24,000

26,800

12%

Gachibowli

23,000

25,600

11%

Kondapur

21,500

24,000

12%

NCR

Sohna Road

26,000

29,500

13%

Sector-150 (Noida)

16,500

19,000

15%

Dwarka

20,000

22,000

10%

MMR

Chembur

49,500

58,000

17%

Mulund

40,000

45,400

14%

Ghodbunder road – Thane

28,000

32,000

14%

Kolkata

EM Bypass

19,500

22,000

13%

Rajarhat

15,000

16,500

10%

Joka

13,500

15,000

11%

Bengaluru

Sarjapur Rd (excluding Sarjapur Village)

22,500

27,000

20%

Marathahalli-ORR

22,500

28,000

24%

Whitefield

21,900

26,500

21%

Thanisandra Main Rd

21,000

26,000

24%

Pune

Hinjewadi

18,500

22,000

19%

Wagholi

15,000

17,000

13%

Baner

20,000

23,000

15%

Chennai

Perambur

16,800

18,500

10%

Pallavaram

15,500

18,000

16%

Oragadam

12,200

13,500

11%

Source: ANAROCK Research

 

Top Rental Markets – City-wise

 

Besides the prominent localities in Bengaluru, other cities also recorded notable rental values growth:

 

  • Pune’s three standout markets with high rental growth between Q1 2022 and Q1 2023 are Hinjewadi, Baner and Wagholi, which witnessed rental value growth of 19%, 15% and 13%, respectively
  • In Chennai, the top 3 markets to witness high rental values growth are PallavaramPerambur and Oragadam, with rents in this period growing by 16%, 10% and 11% respectively
  • In NCR, the top 3 markets were Sohna Road in Gurugram (rental values increased by 13%), Sector-150 in Noida (15% growth) and Dwarka in Delhi with a rental value growth of 10% 
  • In MMR, the top 3 markets for rental value growth were Chembur, Ghodbunder Road (Thane) and Mulund, which saw 17%, 14% and 14% growth, respectively
  • Kolkata’s top 3 markets with high rental value growth between Q1 2022 and Q1 2023 were EM Bypass, Joka and Rajarhat, where rents rose by 13%, 11% and 10%, respectively
  • In Hyderabad, the top 3 markets were HITECH City and Kondapur, which saw rental values increase by 12% each, and Gachibowli with 11% growth

 

Rental Yields

 

Residential rental yield (the annual rate of return an investor can earn from capital invested in a property) had for long stagnated in India. The national average stood at 3% for the last few years pre-pandemic. However, things began to change with rental demand spiking up post the pandemic in 2022. Among the top 7 cities, Bengaluru has the highest rental yield of 4.1% as of Q1 2023-end, followed by Mumbai with 3.9%. Pre-Covid, the rental yield in Bengaluru was at 3.6% – the highest back then, as well.

 

(Note: Top 3 areas with high rental demand from each of the top 7 cities have been considered)

 

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