Bengaluru witnesses highest rental yield of 4.45% in Q1 2024 followed by Mumbai and Gurugram

Bengaluru has highest rental yeild at 4.45 percent followed by Mumbai and Gurugram

At 4.45 percent, Bengaluru's rental yield is the highest in Q1 2024 followed by Mumbai at 4.15 percent and Gurugram at 4.1 percent rental yields, according a report by Anarock, a real estate consultancy firm.

The report said that there has been a steep rise in rental housing demand in the top cities and rental yields - the annual return on investment (ROI) investors earn from capital invested in a property - have been heading steadily north even as the average rental values have also soared.

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Bengaluru’s rental yield in pre-Covid 2019 stood at 3.6 percent, which amounts to a growth of 24 percent till date. Mumbai comes next with a rental yield of 4.15 percent in Q1 2024 as against 3.5 percent back in 2019 – registering a 19 percent growth. Gurugram is close behind with a rental yield of 4.1 percent in the last quarter against 3.5 percent in 2019.

Santhosh Kumar, Vice Chairman – ANAROCK, said that residential rental yields in India had chronically stagnated before the Covid-19 pandemic, with the national average at just 3 percent for many years but with post-pandemic rental demand soaring after offices resumed, rental yields are heading north too.

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“IT dominated cities including Bengaluru, Gurugram, Pune, Noida, and also MMR (Mumbai Metropolitan Region), have seen considerable upticks in their rental values, and therefore yields,” he said.

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Rental value growth in Q1 2024

In the prominent localities of the top seven cities, there has been an average jump of 4-9 percent in residential rentals in Q1 2024.

As per ANAROCK data, the average rental values in Bengaluru’s Sarjapur Road and Whitefield rose by 8 percent each in Q1 2024 against the previous quarter. In Sarjapur Road, the average monthly rent in Q4 2023 stood at approximately Rs 31,600 for a 2BHK flat of 1,000 sqft while in Q1 2024, it went up to Rs 34,000 per month.

Similarly, Whitefield saw average monthly rents go up from Rs 30,200 in Q4 2023 to Rs 32,500 in Q1 2024 - an 8 percent jump. A comparison of rental values between 2022-end and Q1 2024 shows that top localities in Bengaluru saw a staggering hike of 40 percent and above.

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In NCR, Noida’s Sector 150 saw average rental hike of 9 percent, and 6 percent in Delhi's Dwarka. In Mumbai, Chembur and Mulund saw 4 percent growth each in rental rates. In Chembur, the average monthly rental in Q1 2024 stood at approximately Rs 62,500 as against Rs 60,000 back in Q4 2023.

Kolkata’s Rajarhat saw the lowest increase of 3 percent in the period – from approximately Rs 18,500 per month in Q4 2023 to around Rs 19,000 per month in Q1 2024. In both Chennai and Mumbai, rents rose by 4 percent while in Hyderabad, prominent localities like HITECH City and Gachibowli saw rents rise by 5 percent each in the quarter.