Housing rental market flourishes in IT hubs

Residential rental prices continue to rise in top 7 cities, led by major IT/ITeS hubs – Bengaluru, Hyderabad and Pune. The latest data from Anarock Research shows that among the top 7 cities, residential rental prices in prominent areas of Bengaluru have increased by more than 30% in the first nine months of 2023 (9 months of 2023).

A standard 2 BHK apartment of approximately on an area of 1000 sq ft in Whitefield in Bengaluru saw rental prices increase by 31% in the first nine months of 2023, followed by Sarjapur Road where rental prices of such properties increased by 27%. % in this period % have increased.

In hard numbers, the average monthly rent of a standard 1000 sq ft 2 BHK house in Whitefield has increased from Rs 24,600 per month at the end of 2022 to Rs 28,500 per month at the end of September 2023. On Sarjapur Road, Average monthly rents increased from Rs 24,000 per month in 2022 to Rs 30,500 per month in September 2023.

Interestingly, the next two hotspots of rental growth are also IT/ITeS centres. Hyderabad witnessed the second-best growth in rental value, with key markets in the city experiencing growth of up to 24% during this period, compared to all major locations in India's top 7 cities.

In HiTech City, average rents stood at Rs 24,600 per month at the end of 2022; At the end of the third quarter of 2023, they stood at Rs 28,500 per month, a growth of 16% in the nine-month period. In Gachibowli, rental prices increased by 24% during the same period, from Rs 23,400 per month at the end of 2022 to Rs 29,000 per month at the end of September this year.

The third notable city that witnessed good rental value growth was Pune, where Hinjewadi micro market recorded rental value growth of 17% in the last nine months. In this case, the average rental prices were Rs 21,000 per month at the end of 2022 and Rs 24,500 per month at the end of September 2023.

Anuj Puri, Chairman, Anarock Group, said: “After a near-terminal recession during the first and second waves of Covid-19, residential rental prices are one of the most notable recovery stories in the post-pandemic real estate sector. In the first nine months of 2023, home rental prices in the top 7 cities increased by more than 30%. Already in the spotlight for its astronomical rental values post-Covid-19, Bengaluru continues to stand out among the top 7 cities. The fact that the next two hotspots for rental value growth are also IT/ITeS-centric cities also underlines the fundamental strength of India's infotech sector, despite increasingly stringent measures in the sector ”.

However, we may now see rental prices in most cities start to stabilize in the current quarter, as rental prices tend to remain low in the last quarter of the year, says Puri. "Rents will go up again if rentals are chosen between January and March," he says. "This is the time when Indians typically move for better job opportunities, amid increased hiring in the new financial year."