Magicbricks Rental Update: Significant Surge in Rents Across Indian Cities
India’s leading property portal, Magicbricks, has published its Rental Update report for October-December 2023, revealing a robust 17.4% year-on-year (YoY) surge in rents across 13 major Indian cities. This surge has been driven by various factors, including economic expansion, thriving job markets, rising disposable incomes, and an influx of migration to Tier 1 cities.
Gurugram, Greater Noida, and Bengaluru Lead Rent Surges
According to the report, Gurugram experienced the highest YoY rent surge, with a notable increase of 31.3%. Greater Noida closely followed with a 30.4% YoY surge, while Bengaluru recorded a substantial increase of 23.1% YoY. These cities demonstrate the escalating demand for rental properties, driven by favorable employment opportunities and a desirable living environment.
Upward Trend in Quarterly Rent Increases Continues
The Magicbricks Rental Update report also highlighted the continuation of the upward trend in quarterly rent increases. Rents rose by 1.6% quarter-on-quarter (QoQ), following a significant increase of 4.6% QoQ between July and September 2023. This indicates sustained growth and a lucrative rental market for landlords and property owners.
Modest YoY Increase in Rental Demand
In terms of rental demand, the report observed a modest 1.6% YoY increase. Greater Noida emerged as a leader in rental demand growth with 6.9% YoY, closely followed by Ahmedabad (6.6% YoY), and Chennai (4.1% YoY). This increase stems from the higher number of young individuals and professionals seeking rental properties in these cities.
Significant Decrease in Rental Supply
Concurrently, the Magicbricks report highlighted a considerable decrease of 16.9% YoY in rental supply. Cities like Noida (19.6% YoY), Hyderabad (3.2% YoY), and Greater Noida (2.7% YoY) experienced an increase in rental supply despite the overall decline. This reduction in supply can be attributed to the prevailing trend of interest rates surpassing the rental yields. As a result, investors and property owners appear to be less motivated to participate in the rental housing market.
Expecting a Rebound in the Short to Medium Term
Although the report noted a cyclical dip in rental demand between October and December 2023, the Magicbricks analysts anticipate a rebound in the short to medium term. This rebound can be attributed to the dynamic nature of the rental market and the consistent demand from the young millennial population that constitutes 67% of rental demand. The report emphasizes the potential for growth opportunities for property owners and investors in the rental market.
2 BHK Dominates Rental Demand
The Magicbricks Rental Update report also revealed interesting insights into the preferences of rental property seekers. Across the surveyed cities, 2 BHK (Bedroom, Hall, and Kitchen) units dominated the market, representing 41% of the rental demand. This indicates a higher preference for moderately sized accommodation among tenants.
Therefore, the Magicbricks Rental Update paints a positive picture for the rental market in India. The surge in rents, driven by economic growth and migration to Tier 1 cities, suggests a flourishing rental landscape. Despite a temporary dip in rental demand, market analysts expect a rebound, providing further opportunities for property owners and landlords to capitalize on the rental market.
