16% Y-o-Y Surge in Rents Across 13 Major Indian Cities: Greater Noida and Gurugram Lead; Magicbricks Report

Magicbricks, a prominent real estate platform, has recently released its rental update for the period of January-March 2024, shedding light on a notable surge in rents across 13 major Indian cities. The report indicates a substantial 16 per cent year-on-year increase in rents, with Greater Noida, Gurugram, and Bengaluru emerging as frontrunners with year-on-year growth rates of 32.1 per cent, 24.5 per cent, and 23.7 per cent, respectively. 

Rental Dynamics and Trends 

The quarterly report also reveals a 2.8 percent quarter-on-quarter (Q-o-Q) increase in rents, following a 1.6 per cent increase in the previous quarter between October and December 2023. Rental demand has witnessed a significant surge, with a notable 16 per cent Q-o-Q increase during the period under review. Chennai, Navi Mumbai, and Noida have reported the highest demand growth rates of 24.9 per cent, 20.1 percent, and 19.2 percent Q-o-Q, respectively. 

Supply and Demand Dynamics 

Contrary to the escalating demand, the supply of rental units has only marginally increased by 1.8 percent Q-o-Q, attributed to the swift absorption of available rental properties. Abhishek Bhadra, Head of Research at Magicbricks, elucidated on the factors driving the surge in rents, highlighting the shift in rental yields since 2022. He stated, "Prior to 2020, residential rental yields in India were averaging around 3 per cent. However, since 2022, following the resumption of office operations, we've witnessed a notable surge in rental demand, consequently driving up rents and offering higher yields to landlords."

Bhadra further anticipates this upward trend in rents to persist over the next few months, particularly as rental activity typically peaks in the first two quarters of the fiscal year. He emphasized that residential and IT hubs like Bengaluru, Gurugram, Hyderabad, and Noida have experienced significant increases in their rental yields, aligning with their expectations. 

Market Segmentation 

The report also delves into the segmentation of rental accommodation demand within various budget brackets. Accommodations within the range of ₹10,000 to ₹30,000 per month dominate the market, accounting for 42 per cent of the total demand share. 

City-wise Analysis 

The report provides a comprehensive breakdown of rental dynamics across major cities. For instance, Ahmedabad witnessed a Q-o-Q demand growth of 14.3 percent and a marginal supply increase of 0.1 per cent. Bengaluru, despite a supply decrease of 6.2 per cent, saw a demand increase of 15.0 per cent Q-o-Q and a rent surge of 4.4 per cent Q-o-Q and 23.7 per cent year-on-year. Chennai experienced a significant Q-o-Q demand growth of 24.9 percent but a supply decrease of 22.6 per cent. Delhi saw a Q-o-Q demand growth of 14 per cent and a supply decrease of 2.7 per cent. Similar trends are observed in other cities like Greater Noida, Gurugram, Hyderabad, Kolkata, Mumbai, Navi Mumbai, Noida, Pune, and Thane, with varying degrees of demand and supply changes along with rent increases. 

The rental update from Magicbricks offers valuable insights into the evolving dynamics of the rental market in India. With rents on the rise and demand outpacing supply in many cities, stakeholders in the real estate sector must adapt their strategies to navigate these changing trends effectively.