Chennai Leads with a 22.2% Jump; Gross Rental Yields Rise to 3.62%

New Delhi, November 18, 2024: India’s rental market has witnessed a remarkable surge, with average rents across 13 major cities increasing by 7.4% quarter-on-quarter (QoQ), according to the latest Rental Update from Magicbricks, a leading real estate platform. Between July and September 2024, the average rent climbed to ₹35.8 per square foot per month, marking the highest quarterly increase in two years.

Key Highlights from the Report

Chennai Tops the Chart: Chennai recorded the highest increase in rents, surging by 22.2% QoQ to ₹26.91 per square foot (psf), up from ₹17.94 psf in Q2 2024.

Delhi and Thane Shine: Delhi’s average rent rose by 11.4% QoQ to ₹37.55 psf, while Thane saw a 10.9% QoQ jump, reaching ₹33.10 psf.

Mumbai Remains India’s Costliest: Mumbai maintained its position as the priciest rental market at ₹86.50 psf per month, followed by Delhi and Navi Mumbai at ₹37.55 psf and ₹33.83 psf, respectively.

Demand-Supply Imbalance Fuels Rental Spike

The report highlighted a continued mismatch between demand and supply:

Rental Demand Growth Slows: After a strong 14.8% QoQ rise in rental demand during April-June 2024, growth slowed to approximately 2% QoQ in Q3 2024.

Supply Shrinks Further: Rental property supply declined by 6.7% QoQ, intensifying the pressure on rents.

Prasun Kumar, Chief Marketing Officer at Magicbricks, explained, “The strong demand for ready-to-move apartments, primarily for self-use, has reduced the availability of rental properties. However, the rise in under-construction supply offers hope for market balance in the coming quarters.”

Gross Rental Yields Hit 3.62%

Magicbricks’ report also revealed an improvement in gross rental yields, reaching an average of 3.62% across 13 cities.

Ahmedabad Leads in Yields: With a yield of 3.9%, Ahmedabad emerged as the top-performing city, followed by Hyderabad, Kolkata, and Pune at 3.7% each.

Chennai Records Largest Yield Growth: Chennai witnessed a 21.3% QoQ increase in yields, while Delhi (8.8%), Hyderabad (5.4%), and Navi Mumbai (5.3%) also showed significant gains.

Mixed Performance Elsewhere: Cities like Greater Noida, Gurugram, and Pune reported declines in yields as property price growth outpaced rental rate increases.

Affordability Index: Where Do Rents Stand?

While Mumbai dominated the rental price spectrum, developing cities like Greater Noida (₹15.48 psf), Noida (₹21.32 psf), and Kolkata (₹22.14 psf) remained among the most affordable.

City-Specific Trends

Outlook for the Rental Market

With rental prices hitting historic highs and yields showing improvement, India’s rental market is expected to remain robust in the near term. The ongoing construction of new housing projects may provide some relief to tenants in the future, but for now, renters face the pressure of rising costs.

This report underscores the evolving dynamics of India’s real estate sector, as rental affordability continues to be a critical issue in both metro and non-metro cities.