Rentals Soar in Major Cities in India: Bengaluru tops the chart, Mumbai 2nd – Know factors driving rental yields

financialexpress.com:

India’s Silicon Valley Bengaluru has again emerged as the numero uno city in terms of rise in rental yields in top 11 cities/regions of the country, according to an ANAROCK report. Mumbai was second on the list followed by Gurugram.

IT-dominated Bengaluru tops the list with a rental yield of 4.45% in Q1 2024. Bengaluru’s rental yield in pre-Covid 2019 stood at 3.6%, which amounts to a growth of 24% in this period, showed ANAROCK data.

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.

Mumbai comes next among the top cities with a rental yield of 4.15% in Q1 2024 as against 3.5% back in 2019 – a 19% growth. Gurugram is close behind with a rental yield of 4.1% in the last quarter against 3.5% in 2019.

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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, the report said.

“Residential rental yields in India had chronically stagnated before the Covid-19 pandemic, with the national average at just 3% for many years,” says Santhosh Kumar, Vice Chairman – ANAROCK Group. “With post-pandemic rental
demand soaring after offices resumed, rental yields are heading north too. ITdominated cities including Bengaluru, Gurugram, Pune and Noida, and also MMR, have seen considerable upticks in their rental values, and therefore yields.”

Residential rental values in India’s top cities have resurged tremendously after the pandemic, with 2023 seeing them soar by over 30% y-o-y. In the last quarter of 2023, rental