Real estate sees pan-India rental demand rising 29% this year: Report

The aggregate rental demand (searches) increased by 29 percent year-on-year and the average rent across India increased 5.2 percent quarter-on-quarter, the Magicbricks Rental Index for Q3, 2022 showed.

The Pan-India average rents increased 5.2 percent QoQ; Bengaluru (7.3%), Mumbai (6.6%), Greater Noida (6.3%) and Hyderabad (5.2%) observed maximum increase, it showed.

The Pan-India rental housing availability declined 9.8 percent QoQ across the 13 Indian cities that were mapped. Chennai, Hyderabad and Delhi witnessed the least QoQ fall of 1.9 percent, 4.8 percent and 5.2 percent respectively, it showed.

Bengaluru’s average rents increased 7.3 percent QoQ while demand (7.8%) and supply (12.6%) declined QoQ. There was a preference for semi-furnished 2 BHKs, constituting 52 percent of the total demand and 55 percent of the total supply.

In Chennai, 40 percent of tenants were interested in units within 500 – 1,000 sf. The average rent increased 2 percent QoQ, while demand for rental units declined 5.6 percent QoQ and there was a marginal dip of 1.9 percent  QoQ in supply

Delhi's average rent increased 3.1 percent QoQ, demand registered a marginal decline of 2.6 percent QoQ, and the supply reduced 5.2 percent QoQ. The residential market was dominated by 2 BHKs and 3BHKs with an aggregate demand and supply share of 75 percent.

The average rent in Mumbai increased 6.6 percent QoQ while demand (5.1%) and supply (11.8%) declined QoQ. Tenants preferred smaller units (500-1,000 sf) which constituted 52 percent of demand and 44 percent of supply, the report said.

In Noida, the average rent increased 4.7 percent QoQ while aggregate demand increased 12.7 percent QoQ and supply reduced by 18.9 percent QoQ. Greater Noida witnessed an increase of 6.3 percent QoQ in average rent while residential demand increased 37 percent QoQ while the supply declined 14.7 percent QoQ with, it said.

Average rent in Gurugram increased 5.2 percent QoQ, demand increased 8.5 percent QoQ while supply declined 13 percent QoQ. Homebuyers preferred medium-sized apartments, with demand for 3BHKs constituting 41 percent, it said.

Average rent in Ahmedabad increased 2.3 percent QoQ with a decline of 8.9 percent QoQ in demand and 9.5 percent QoQ decline in supply of rental units. 2BHK and 3BHK units continue to hold a majority share in the market with a demand of 43 percent each, the report said.

“The Indian rental housing market recovered steadily during the first quarter of 2022, which was complemented by growth in the second quarter fueled by the gradual reopening of offices and educational institutions, and workforce returning to these cities. Hence in Q3, the rental demand declined marginally and available inventory reduced, thus stabilizing the rental housing market relative to the peak quarter of Q2’ 2022. With the effects of pandemic now waning, we can expect this normal cycle to persist henceforth,” said Sudhir Pai, CEO, Magicbricks.

The report concluded that the availability of rental units are being affected by delay in delivery of under construction units and most available units are being bought as residences not investments.