Tech firms' back-to-office drive fuels rental yields to 4.45% in Bengaluru

Rental values skyrocket: IT companies' return to office call has prompted a steep rise in rental housing demand in the top cities, leading to a notable surge in average rental values and rental yields. Bengaluru leads the pack with a rental yield of 4.45 per cent in Q1 2024. This growth trend is further highlighted by the city's pre-Covid 2019 rental yield of 3.6 per cent, reflecting a 24 per cent increase over this period, according to Anarock data.

Mumbai took the second spot with a rental yield of 4.15 per cent in Q1 2024, exhibiting a notable growth of 19 per cent from its 2019 figure of 3.5 per cent. Close on its heels, Gurugram follows suit with a rental yield of 4.1 per cent in the last quarter, showing a comparable increase from its 2019 value of 3.5 per cent.

Where are rental markets booming?

Notably, prominent localities in Bengaluru such as Whitefield and Sarjapur Road witnessed 8 per cent quarterly growth in rental rates.

In Mumbai, the story is no less compelling. The city's realty market has been buoyed by a resurgence in rental demand, fuelled by economic recovery and renewed investor confidence. Areas like Chembur and Mulund experienced a 4 per cent growth in rental rates.

Gurugram closely follows Mumbai with a rental yield of 4.1 per cent, signalling a notable uptick from 2019 figures. Other key cities, including Noida and Delhi, have also witnessed significant growth in rental values, albeit at a slightly lower pace compared to Bengaluru and Mumbai.

Landlords' gains, tenants' strain

The rental value growth in Q1 2024 highlights a broader trend of robust recovery in India's real estate market. Average rents in prominent localities across the top seven cities surged by 4-9 per cent quarter-on-quarter, outpacing the typical annual increase of 5-10 per cent. While this trend spells good news for landlords, it raises concerns about the rising cost of living for tenants.

The latest data paints a bullish picture of India's rental real estate market, with Bengaluru leading the charge in rental yield growth, closely followed by Mumbai and other key cities. As the economy continues to rebound and demand for rental housing remains strong.