Rental income in key Indian cities spiked over 14%, says Magicbricks report

Rental income in major Indian cities has risen by 14.6% every year, and a meager 2.6% on a quarterly basis, said a recent report by Magicbricks, a real estate platform.

Explaining the rental income dynamics, Abhishek Bhadra, Head of Research, Magicbricks, noted that with economic activity peaking, they anticipate continued growth in both rental demand and rents in the short to medium term.

"Additionally, the supply of rental units is expected to improve as the stock of under-construction properties nears completion. Overall, the current landscape presents a promising opportunity for landlords and investors, encouraging greater participation in the rental market," said the Head of Research.

Rental income is a major source of earning for millions of Indians. Navi Mumbai saw 6.2 % jump quarterly, while Hyderabad (4.2%), and Ahmedabad (4%) exhibited the most significant increase in average rents. In Navi Mumbai, the average rent increased from Rs 28.99 per square feet (psf) per month in Jan-Mar 2024 to Rs 30.78 psf per month in Apr-Jun 2024.

Similarly, average rents in Hyderabad increased from Rs 22.01 psf to Rs 22.93 psf per month, while in Ahmedabad, rents rose from Rs 17.25 psf to Rs 17.94 psf per month.

The report observed a significant 14.8% quarterly increase in rental demand during this period, following a 16% quarterly increase in the previous quarter. However, the report asserted that the supply has decreased by 2.2% quarterly across the cities due to high absorption rates, leading to a rise in rents.

The highest rents are in cities of Mumbai (Rs 82.28 psf) per month, Delhi (Rs 33.72 psf) per month and Thane (Rs 29.84 psf) per month.

The Magicbricks report further observed that average rents in Greater Noida is Rs 14.52 psf per month, Rs 20.10 psf per month in Noida and Rs 28 psf per month in Bengaluru. With high rental demand and rents, residential real estate continues to be a lucrative investment market.

While across the top 13 cities, the average rental yield is 3.6%, investments in Ahmedabad, Pune and Kolkata demonstrated the highest rental yields (3.8%), observed the report.