Bengaluru witnessed the most significant surge in rental rates in 2023, according to two independent surveys. No Broker’s Real Estate Report 2023 and consultancy firm Anarock both reported that rents in prominent areas of Bengaluru rose by over 30 percent.
No Broker stated that seven percent of landlords in Bengaluru and Mumbai increased rents by more than 30 percent in 2023, and 52 percent of surveyed landlords in Bengaluru rely entirely on rental income.
Anarock’s report highlighted that Bengaluru, Hyderabad, and Pune experienced the highest rental increases in the first nine months of 2023. According to the consultant’s findings published by the New Indian Express, rents for a standard 2BHK flat of about 1,000 square feet in Bengaluru’s Whitefield grew by 31 percent, while rents in Sarjapur increased by 27 percent.
Saurabh Garg, co-founder and chief business officer of No Broker, explained the sudden rise in rents to the Times of India, attributing it to the impact of the Covid pandemic on the supply of residential properties. He mentioned that with more people entering the city and fewer available spaces, rents went up in Bengaluru. In 2023, the Indian real estate sector experienced robust growth, marked by increased demand for property purchases, rising rentals, and soaring property prices, particularly in Bengaluru.
No Broker added that the increase in rents in other cities like Delhi NCR, Mumbai, Chennai, and Kolkata ranged between 9 percent and 14 percent.
The steep rise in rents in Bengaluru became a hot topic on social media, with stories of bizarre experiences emerging. Notably, a potential tenant was rejected by a landlord for scoring 75 percent in his Class 12 board exams, falling short of the landlord’s 90 percent benchmark. Another peculiar incident involved a woman sharing her landlord’s formal “offer letter” after participating in an “interview.”
In March, a Google employee, Ripu Daman Bhadoria, who had moved to the city from Seattle in 2022, failed to secure an apartment after facing stiff competition during an interview with a Bengaluru landlord.
IT HUBS LEAD THE LIST
Hyderabad emerges as the second hotspot for rental growth, with a substantial 24 percent surge noted in Gachibowli. Particularly noteworthy is the HITECH City in Hyderabad, where average rents spiked from Rs 24,600 per month to Rs 28,500 per month during this period.
In Pune, another significant IT hub, there has been considerable growth in rental values, especially in the Hinjewadi micro-market, witnessing a 17 percent increase, and in Wagholi, experiencing an 18 percent surge.
Anuj Puri, Chairman of Anarock Group, comments on the trend, stating, “After a nearly terminal downturn during the first and second waves of Covid-19, residential rents have surged by over 30 percent in the top 7 cities. The fact that all three leaders in rental value growth are IT/ITeS-centric cities showcases the fundamental strength of the Indian Infotech sector, despite belt-tightening moves in the industry.”
Puri anticipates a stabilization of rental values in most cities in the ongoing quarter, as rental activity typically remains low in the last quarter of the year. He predicts a resurgence in the January to March period, coinciding with increased hiring and relocation by Indians in the new financial year.
