Following a lull in the real estate market during the Covid-19 pandemic, housing rentals will reportedly go up in 2023, buoyed by rising demand in the sector. A new report reveals that the average monthly residential rentals in the top seven Indian cities, in both luxury and mid-segment categories, were on a roll in 2022 and would likely continue in the upward trajectory. According to the latest data shared by property consultancy Anarock, the key residential rental hotspots saw 23 per cent growth in “average monthly rentals between 2019 and 2022”.
Anuj Puri, chairman of Anarock Group, has noted that “rental demand increased substantially in 2022" due to more "companies calling their employees back to the office, including in the hybrid mode." Puri observed that the rental demand is rising across the seven top cities "after plummeting during the two worst Covid-19 waves. We still recall the death knell being rung for the rental market in 2020.”
As things stand now, rental demand will continue to head northward in 2023, according to Puri, who explained that the current market surge in rentals could be attributed to the resurging demand for rental properties as most offices re-establish normal in-office work. Puri said that “employees returning from their hometowns or other parts of the city tend to rent homes for at least the short-term, often to consider purchases at a later stage. As both property prices and interest rates continue to rise, the overall cost of property acquisition is increasing, leading to an increase in deferred property purchase decisions. Resultantly, they will seek rental homes.”
Another major factor in the current market surge, Puri explains, is that with the “new academic session imminent, more parents will look to locate the family close to schools, leading to further hikes in rental demand in the coming months.”
Monthly Rentals Go Upwards in Major Indian Cities
Among the major areas, the Anarock data showed that Noida Sector-150 has reportedly remained on top with monthly rentals for “a standard 1,000 sq. ft. flat at approx. Rs 19,000 per month, from INR 15,500 per month in 2019.”
Meanwhile, prominent micro-markets in Pune, namely Hinjewadi, and Wagholi, witnessed average monthly rentals for “a standard 1,000 sq. ft. home go up by 20 per cent and 21 per cent, respectively, in this period.” Bengaluru’s Whitefield recorded approximately 18 per cent average rental growth, from Rs 19,000 per cent per month in 2019 to Rs 22,500 per month in 2022.
Interestingly, prominent localities with high rental demand saw double-digit rental growth between 2019 and 2022. However, Hyderabad was reportedly a notable exception, as the data
showed that the key areas like “Gachibowli and HITECH City recorded single-digit growth of 6 per cent and 7 per cent, respectively. Mulund in Mumbai Metropolitan Region (MMR) also saw just 6 per cent growth in residential rentals in this period.”
Another interesting fact highlighted by the Anarock data was that the average monthly rentals in the prominent luxury micro-markets of the top seven cities increased between 7 per cent and 18 per cent in 2022 over 2019. In this case, NCR’s Golf Course Extension reportedly saw the highest growth, a whopping 18 per cent increase from Rs 49,000 per month in 2019 to Rs 58,000 per month in 2022 for luxury homes of around 2,000 sq. ft. area.
“This was followed by Hyderabad’s Jubilee Hills, which witnessed a 17 per cent jump in the same period from Rs 54,000 per month in 2019 to Rs 63,000 per month in 2022. Meanwhile, Worli in Mumbai witnessed “rental growth of 16 per cent in the period from Rs 2.05 lakh per month in 2019 to Rs 2.38 lakh per month in 2022,” even as Rajaji Nagar in Bengaluru saw “16 per cent growth in average monthly rental values for luxury homes from Rs 56,000 per cent month in 2019 to Rs 65,000 per month in 2022.”
Additionally, the average luxury home rentals in Anna Nagar in Chennai reportedly rose from “Rs 55,000 per month in 2019 to Rs 64,000 per month in 2022,” which is a 16 per cent jump, the report showed.