The Indian rental market was grappling with several issues over the last couple of years, including WFH, economic fluctuations and job losses owing to the COVID-19 pandemic. The market plunged by 5-15% post the coronavirus outbreak, stabilizing only in H2 2021. The rental market is on a firmer trajectory towards impressive future growth as per several reports.
The CBO and Co-Founder at a leading rental management firm, Altaf Ahmad, stated that cities such as Noida, Gurgaon, Mumbai, Bengaluru and Hyderabad are seeing positive growth in rental demand in Q1 2022, since they are home to a majority of corporate offices. He also added that Bengaluru and MMR were the most-preferred cities for rentals for this period, taking up 27% and 30% of overall demand. Hyderabad saw sizable increases in rental housing demand with year-on-year and quarter-on-quarter growth of 150% and 30% respectively. Yet, Ahmad opined that rental rates have remained unchanged in many cities for mid-range and affordable units while luxury unit rentals have zoomed by 10-15%, particularly in cities like Bengaluru and Gurgaon.
The Model Tenancy Act of 2021 has been a boost for the rental housing market, in tandem with the PMAY. While home ownership is a bigger priority for many households today, there is still steady demand for rental units. Homebuyers are also shifting to bigger and more affordable rental units in suburbs from city centres. People are mostly looking for semi-furnished homes which are less costly than fully-furnished counterparts. This demand is pronounced in Noida, Gurgaon and Bengaluru. Pune and Mumbai have more demand for homes which are unfurnished. Demand is mostly centered on units with rentals of Rs. 10-20,000 per month, while there is slight growth in enquiries for properties commanding monthly rentals in excess of Rs. 30,000 according to Ahmad. He stated that renters are amenable to spending a little more, with demand for rental units with rates of Rs. 30,000 and more going up by 5% for Q1 2022.
Ahmad also feels that people will keep choosing rental homes in localities with all required amenities and lifestyle elements. Affordability will not be the sole driver of this segment. He also states that rental yields of 3% or higher may be anticipated if investors snap up affordable units between Rs. 5-6,000 sq. ft. nationwide. Properties covering more than this threshold should earn rental yields of 2.4-3%. Mid-range properties are also seeing decent rental yields than earlier, owing to higher demand after the pandemic according to him.
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Published Date: 08 June, 2022
