Residential rental demand goes up in Hitech City, Kondapur, Gachibowli, Madhapur: Anarock study

HYDERABAD: Residential rental demand has surged in most cities since companies and schools returned to normalcy from work from home mode following the third Covid-19 wave in 2022, particularly in the last year.

Hyderabad, the country's IT/ITeS hub, has seen growing rental values.

HITECH City and Kondapur saw rental values rise by 12 percent each, while Gachibowli in Hyderabad witnessed an 11 percent increase. Rents in Miyapur went up by 11 percent, while those in Begumpet and Madhapur increased by 10 percent, according to ANAROCK's analysis.

Residential rental yield — the annual rate of return an investor can earn from capital invested in a property — had for long stagnated in India. The national average stood at a meagre 3 percent for the last few years pre-pandemic.

However, things began to change with rental demand spiking up post the pandemic in 2022. Among the top 7 cities, Bengaluru has the highest rental yield of 4.1 percent as of Q1 2023-end, followed by Mumbai with 3.9percent.

In the pre-Covid period, the rental yield in Bengaluru was at 3.6 percent - the highest back then, as well.

According to ANAROCK's analysis of monthly rents in the top 7 cities, Bengaluru's Thanisandra Main Road and Marathahalli-ORR saw residential rental values increase by 24 percent each between Q1 2022 and Q1 2023.

The average monthly rent for a conventional two-bedroom property of 1,000 square feet on Thanisandra Main Road increased from Rs 21,000 in Q1 2022 to Rs 26,000 in 2023. Average monthly rentals in Marathahalli-ORR grew from Rs 22,500/month last year to INR 28,000/month in Q1 2023.

Interestingly, the next two hotspots were also in Bengaluru. Whitefield – another prominent IT/ITeS destination - witnessed the 2nd-best rental value growth of 21 percent in this period, against all prominent localities in the top 7 cities of India.

The average rent in Whitefield in Q1 2022 was Rs 21,900/month, and by Q1 2023, it was scaling to Rs 26,500/month.

The third spot was occupied by Bengaluru’s Sarjapur Road, which recorded rental value growth of 20 percent between the first quarter of 2022 and 2023. Here, the average rentals were Rs 22,500/month in Q1 2022 and Rs 27,000/month in Q1 2023.

Prashant Thakur, Sr. Director & Head - Research, ANAROCK Group, says, “When it comes to rental demand and zooming rents, Bengaluru currently stands out among the top 7 cities, with East and North Bengaluru the biggest blips on the rental radar map owing to the IT/ITeS belt there. Whitefield, Sarjapur Road, Marathahalli-Bellandur Outer Ring Road, Thanisandra Main Road and even Hebbal are the clear chartbusters.”

“We anticipate residential rental values in the IT capital's prominent markets to rise further by anywhere between 5-12% in 2023, depending on the location, property, builder-type and other aspects," says Thakur. "In housing societies with limited supply but high demand, the rents could easily rise beyond 12 percent.”

Top Rental Markets - City-wise

Besides the prominent localities in Bengaluru, other cities also recorded notable rental values growth

Pune’s three standout markets with high rental growth between Q1 2022 and Q1 2023 are Hinjewadi, Baner and Wagholi, which witnessed rental value growth of 19 percent 15 percent and 13 percent, respectively

In Chennai, the top 3 markets to witness high rental values growth are Pallavaram, Perambur and Oragadam, with rents in this period growing by 16%, 10% and 11% respectively

In NCR, the top 3 markets were Sohna Road in Gurugram (rental values increased by 13 percent), Sector-150 in Noida (15 percent growth) and Dwarka in Delhi with a rental value growth of 10 percent.

In MMR, the top 3 markets for rental value growth were Chembur, Ghodbunder Road (Thane) and Mulund, which saw 17 percent, 14 percent and 14 percent growth, respectively

Kolkata’s top 3 markets with high rental value growth between Q1 2022 and Q1 2023 were EM Bypass, Joka and Rajarhat, where rents rose by 13, 11 and 10 percents, respectively.

In Hyderabad, the top three markets were HITECH City and Kondapur, which saw rental values increase by 12 percent each, and Gachibowli with 11 percent growth.