With demand for rental housing soaring across major cities, Bengaluru emerges as the frontrunner in rental yield. In the first quarter of 2024, its rental yield reached an impressive 4.45%, as per data from Anarock Group. This surge represents a notable increase from the pre-pandemic levels of 3.6% in 2019, marking a substantial 24% growth over the period.
Following closely behind, Mumbai commands a rental yield of 4.15% in Q1 2024, a significant uptick from 3.5% recorded in 2019. Gurugram secures the third place with an yield of 4.1% in the same quarter, witnessing a notable rise from 3.5% in 2019.
The robust demand, particularly post pandemic, is the driving force behind this surge. It has led to a steady escalation in rental values across key areas of the city, especially with IT companies asking employees to return to offices.
Why is rental yield so important?
It helps investors understand how much return they can expect to earn from their investment property through rental income. It’s a crucial metric for investors to assess the performance and potential profitability of their real estate investments.
| Cities | Rental yield in 2019 | Rental yield In 2024 |
| Gurgaon | 3.50 | 4.10 |
| Noida | 3.20 | 3.70 |
| Delhi | 2.20 | 2.90 |
| Pune | 3.30 | 3.85 |
| Bangalore | 3.60 | 4.45 |
| Mumbai | 3.50 | 4.15 |
| Navi Mumbai | 2.80 | 3.40 |
| Thane | 2.70 | 3.25 |
| Kolkata | 3.30 | 3.80 |
| Hyderabad | 2.60 | 3.20 |
| Chennai | 2.70 | 3.10 (in percent) |
Bengaluru is seeing a surge in average rental values in prime areas such as Sarjapur Road and Whitefield, registering an 8% increase each in Q1 2024 compared to the previous quarter. The comparison between rental values from the end of 2022 to Q1 2024 reveals a hike of 40% and above in Bengaluru’s top localities.
While other major cities have also experienced rental value inflation, it’s not as pronounced as in Bengaluru. In NCR, Noida’s Sector 150 witnesses a 9% rise in average rents, while Delhi’s Dwarka sees a 6% increase. Chembur and Mulund in Mumbai saw a 4% growth each in rental rates.
Chennai and Mumbai reported a more modest 4% increase in rents, while Hyderabad’s prominent localities like HITECH City and Gachibowli saw a 5% rise each in the quarter.
