The demand for rentals in major Indian cities witnessed a substantial upswing, recording an 18.1% increase during the second quarter of the calendar year 2023 (Q2 CY2023). Accompanying this surge, rents experienced a 4.9% hike compared to the preceding quarter, according to a report published by Magicbricks. The report, titled “Rental Index for April-June 2023,” not only highlighted the remarkable rise in rental demand across 13 major Indian cities but also underscored a significant 9.6% increment in supply during Q2.
In terms of unit configurations, the report indicated that 2 BHK units held a prominent position, constituting a commanding 53% share in both demand and supply. Following closely were 1 BHK units, accounting for 27%, and 3 BHK units with an 18% share. The National Capital Region (NCR) emerged as the leader in terms of increased rental demand, boasting a 27.25% surge. This was followed by the Mumbai Metropolitan Region (MMR) at 18.35%, Pune at 19.3%, Hyderabad at 22%, and Bengaluru at 12.8%.
Cities like Bengaluru, Navi Mumbai, and Gurugram stood out for experiencing the highest rise in average rents quarter-on-quarter (QoQ), with figures of 8.1%, 7.3%, and 5.1% respectively. However, Delhi and Mumbai saw minor declines in rents QoQ, registering -0.9% and -0.1% respectively.
Sudhir Pai, Chief Executive Officer (CEO) of Magicbricks, attributed these trends to the revival of the office culture and the resumption of in-person activities at educational institutions. He pointed out the growing demand for housing proximate to workplaces and noted that homeowners capitalized on the buoyant property market by opting to sell rather than rent, thereby reducing the overall supply. This heightened demand significantly contributed to the increased rents observed across major Indian cities.
The report further emphasized the steady demand for 2 BHK units, which not only commanded a substantial 53% share in both demand and supply but also highlighted a preference for more compact living spaces. This was followed by 1 BHK units with 27%, and 3 BHK units with 18%. Interestingly, the demand for 3 BHK units decreased from 36% in Q1 2023 to 18% in Q2 2023, while demand for 1 BHK units increased from 17% to 27% during the same period.
Apart from the proximity to employment hubs, affordability emerged as a notable driving force for the increased demand observed during this quarter. The report pointed out that rental accommodations with monthly rents ranging between Rs 10,000 and Rs 20,000 were particularly favored by tenants. This preference was predominantly seen for unit dimensions spanning 500 to 1,000 square feet of covered area.
In summary, the rental market in major Indian cities exhibited significant growth, driven by various factors including the resurgence of the office culture, educational activities, property values, and affordability considerations.
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