Mint Primer: Why rents will spiral again this year
Mint explains how the rental story may play out: Residential rents have seen a remarkable turnaround post-pandemic. Last year, average monthly rentals in parts of the top 7 cities soared over 30%, according to Anarock Property Consultants. Bengaluru saw the steepest rise, with high demand due to the ‘back to office’ mandate by firms, and low supply of ready projects.
Other IT-dominant cities such as Hyderabad and Pune too saw a sharp rise. After a long dry spell, Gurugram and Noida/Greater Noida saw high double-digit rent appreciation along with a rise in capital values. Monthly rents accelerated faster than property prices in many prime cities.
Yes. Rents are likely to build up further steam in 2024. The increase in rents is a demand-supply game.
The fact is that ready housing inventory remains in short supply and the spike in demand continues. On a high base, the escalation is likely to be in the range of 10-15% this year, as per estimates by Housing.com. Rents may start picking up in the current quarter, and gain momentum in the June quarter, when people usually relocate for better job opportunities—a new financial year typically sees new hiring in many industries.
The sustained growth in rents signals promising opportunities for investors. Home rents scaled a peak in 2023. The unprecedented rise in the last two years has led to a re-rating of rentals across cities and are unlikely to come down in some neighbourhoods.
But there’s always scope for negotiation if renters offer a higher deposit. However, newer homes near a metro, expressway or airport will command a higher rent. Bengaluru, already in the limelight for its astronomic rents, continues to stand out.
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