After a major jump in apartment rentals in the first two quarters of 2024, the apartment rental growth in Bengaluru has slowed down by at least 5-10 percent, according to local brokers. Experts add that this may be due to the abundant supply of apartments in the city's real estate sector and rapid project completions.
While real estate prices continue to remain high in areas like the eastern corridor of Whitefield, Koramangala and BTM Layout, local brokers say that the rentals have remained stagnant compared to the first two quarters of the year.
Additionally, the recent general elections and upcoming Union Budget prompted investors to put their plans on hold.
Experts anticipate a rental correction in parts of Bengaluru
"In places like Whitefield and Sarjapura, the rentals for 2 BHK apartments remained stagnant at Rs 30,000-40,000 since February of this month. Only in some places, we saw the rentals grow for very premium properties, but that also by Rs 4000-5000," Kiran Kumar, Vice President of Hanu Reddy Realty added.
However, last year in June-July, rentals had skyrocketed by almost 15-20 percent compared to the first few quarters of 2023, local brokers add.
"This may be due to new inventories hitting the market and thus narrowing the gap between supply and demand - one of the key reasons that had led to this skyrocketing rentals in the city," Kumar added.
A report by Cushman and Wakefield said that Bengaluru witnessed launches of nearly 8,850 units in Q1 2024, a 14 percent YoY growth with Whitefield accounting for almost 35 percent of the launches. On the other hand, Bengaluru will see about 51,685 units delivered in 2024, against approximately 52,565 units in 2023, another report by real estate consultant ANAROCK pointed out.
"However, though we see a stagnation in rental growth in certain parts of the city, we need to wait for at least a month to see its impact on the sector. If the stagnation continues, we might expect a rental correction that may lead to a drop in rental prices in eastern and parts of central Bengaluru," Kumar added.
Premium rental sector in Mumbai hit too
As per Zapkey, rental growth across premium gated societies in Mumbai has cooled down to 5-9 percent in 2024 after a period of the rapid growth of 50-60 percent in the last two years between 2021-2023.
The massive surge in rental growth in the period 2021-2023 in Mumbai was driven by a massive increase in the redevelopment of societies which led to owners of these societies moving on rent, leading to both a shortage of supply and an increase in demand for rental housing. Demand was even more prominent in premium gated societies.
However, in 2024 the rental growth is more benign and in line with inflation given that the growth in new redevelopment has slowed down. The number of new projects getting completed has also increased, leading to a higher supply of premium gated societies, Zapkey said.
Premium gated societies such as Oberoi Splendor in Andheri East and Lodha The Park in Lower Parel saw a marginal growth of 4 and 9 percent respectively between 2023-2024. Between 2021-2023, both projects saw a hike of about 48 and 55 percent.
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