- Rental values in the IT capital's prominent markets are expected to rise further by anywhere between 5-12% in 2023.
- Bengaluru's Thanisandra Main Road and Marathahalli-Outer Ring Road have witnessed a steep rise of 24% each in residential rental values between Q1 2022 and Q1 2023.
- Besides the prominent localities in Bengaluru, other cities also recorded notable rental values growth.
Real estate services company Anarock, through its analysis of monthly rents in the top 7 cities' prominent areas, has found that Bengaluru's Thanisandra Main Road and Marathahalli-ORR have witnessed the highest growth in residential rental values in Q1 2023 – rising 24% each from a year ago.
The typical monthly rental for a standard 2-bedroom, 1,000 square foot home on Thanisandra Main Road went up from ₹21,000 in Q1 2022 to ₹26,000 in 2023. Meanwhile, at Marathahalli-ORR (Outer Ring Road), the average monthly rent increased from ₹22,500 last year to ₹28,000 in Q1 2023.
Says Prashant Thakur, senior director and head, research, Anarock Group, “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.”
He adds that rental values in the IT capital's prominent markets are expected to rise further by anywhere between 5-12% in 2023, depending on the location, property, builder-type and other aspects.
Interestingly, the next two two areas with the highest rental value growth rates among the seven cities were also located in Bengaluru. Whitefield, which is another significant IT/ITeS hub, experienced the second-highest increase in rental value, with a growth rate of 21% during the same period. That translates to an average increase of ₹4,600/month.
The third spot was taken by Sarjapur Road in Bengaluru, which experienced a rental value growth of 20%, with the average rental value increasing by ₹4,500/month from ₹22,500/month in Q1 2022 to ₹27,000/month in Q1 2023.
In India, the residential rental yield, which represents the annual return on investment in a property, had remained stagnant for a long time, with the national average hovering around 3% in the years before the pandemic.
However, rental demand has increased significantly since the pandemic, particularly in 2022, leading to a change in this trend. As of the end of Q1 2023, Bengaluru has the highest rental yield among the top 7 cities, at 4.1%, followed by Mumbai at 3.9%. Prior to the pandemic, Bengaluru had the highest rental yield at 3.6%.