The average rental inflation in Singapore has been around 29%. However, the net rental inflation in India is higher than these countries, with some pockets of major cities witnessing an exponential rent increase of 30% and above.
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The real estate market in India has been witnessing exponential boom over the last two years. With rentals skyrocketing, the sector has remained buoyant with property owners enjoying the lucrative appeal of their property investment. And it is interesting to note that the net rental yield in India is one of the highest in the world.
According to NoBroker, the average rental inflation in India has surpassed that in Singapore, London & New York. For instance, the average rental inflation in Singapore has been around 29%. However, the net rental inflation in India is higher than these countries, with some pockets of major cities witnessing an exponential rent increase of 30% and above.
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And this is not without reasons.
For example, with offices opening in major cities, the demand for properties around IT parks and office hubs has increased manifold. The supply is still catching up with the increasing demand. This has led to the surge in rental yield.
Furthermore, cities such as Mumbai and Bangalore, with new metro corridors coming up, have also seen an increase in demand for houses along these metro corridors. With the demand rising, properties in proximity to metro corridors in these cities have witnessed 15%-18% rent inflation.
The housing rents have seen a massive jump in Bengaluru in the last year. The average rent inflation in the IT capital has been 24%, with rent inflation in certain areas of the city reaching 30%.
Besides Bangalore, housing rents have soared in other major cities such as Hyderabad and Chennai. The average rent inflation in Chennai has been 18%, closely followed by Hyderabad, where the rise has been 16%. Some pockets in Hyderabad have witnessed a rental spike of up to 25% as well.
Comparative Chart
No wonder, according to the NoBroker annual survey, 86% of landlords are looking to buy a second piece of property to earn a steady income from it.
Talking to the FinancialExpress.Com about the surge in rental yield, Saurabh Garg, Co-founder & Chief Business Officer, NoBroker.com, said, “The net rental inflation in India stands among the highest globally due to a confluence of factors. The gradual reopening of offices has prompted a significant influx of people into major work cities, driving up high demand for housing. The construction activity failed to keep pace with this surge in demand, largely due to the disruptions caused by the Covid-19 pandemic which resulted in the huge demand-supply mismatch. Although supply is gradually increasing, it still falls short of meeting the burgeoning demand.”
Another major factor for such a huge rise in rentals is people’s preference for gated societies, especially within the city limits and close to office parks. The rental inflation for residential units near offices and within gated societies in Bangalore, for instance, is ranging between 25% and 40%, and approximately 17%-18% overall.
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“On the contrary, the net rental inflation in other developed nations remains lower than that in India. This is chiefly due to the fact that these countries have still not been able to shift completely to work from the office and their employees are still operating from home or in hybrid model. As a result, the demand for properties in urban centers has not surged to the same extent as in India,” added Garg.
