Housing rental growth drops by half in top cities compared to previous quarter as supply increases

The average rental hike was at 2-4% in Q2 2024 compared to 4-9% in Q1 2024; Bengaluru’s Whitefield and Noida’s Sector 150 saw the highest rental growth at 4%

With more housing supply hitting the top seven cities' markets, overheated housing rents are stabilizing. Residential rentals in key micro markets across top cities witnessed quarterly growth of 2-4% in Q2 2024 compared to 4-9% in Q1 2024, data shared by Anarock shows.

Housing rentals in key micro markets across top cities, including Mumbai, witnessed quarterly growth of 2-4% in Q2 2024 compared to 4-9% in Q1 2024(Mehul R Thakkar)

Real estate consultant Anarock said that the growth in housing rents across the top seven cities - Delhi-NCR, Mumbai Metropolitan Region (MMR), Chennai, Kolkata, Pune, Hyderabad and Bengaluru - has moderated because of improvement in housing supply. 

With more new supply entering the markets, a highly speculative residential rental spike is coming to a halt. “ANAROCK data indicates that approximately 5,31,470 units are expected to be completed in 2024 across the top 7 cities, provided there are no delivery delays,” says Santhosh Kumar. “In 2023, approximately 4,35,045 units were completed in these cities.”

Bengaluru’s Whitefield and Noida’s Sector 150 witnessed the highest 4% quarterly rental growth each in Q2 2024 against the preceding quarter. MMR is expected to see approximately 1.61 lakh units completed in 2024 and 1.44 lakh units in NCR.

“In India, the second quarter of most years typically sees rents increase more than in other quarters due to the commencement of the new academic year and the employment of new staff. This year, declining rental value growth coincides with substantial new housing supply entering these markets,” said Santhosh Kumar, vice chairman, ANAROCK Group.

The top 7 cities are set to deliver approximately 5.31 lakh new units in 2024 while in 2023, these cities saw approximately 4.35 lakh units hit their markets. This denotes a 22% annual supply increase this year if delivery schedules remain on track.

Bengaluru rentals and supply

Average rents for a standard 1,000 sq.ft. 2 BHK in Bengaluru’s Whitefield rose by 4% – from ₹32,500 per month in Q1 2024 to ₹35,000 per month in Q2 2024 to date. In Q1 2024, the quarterly jump against Q4 2023 was double at 8%. Bengaluru, the key rental hub with the highest rental value hikes, will see approximately 51,685 units delivered in 2024, against approximately 52,565 units in 2023.

Noida rents and housing supply

As per the data, the average rents in Noida's Sector 150 rose by a mere 4% to ₹25,000 per month in the April-June quarter from ₹24,000 per month in January-March 2024. The quarterly hike stood at 9% in January-March 2024 as against the October-December period of 2023. NCR is expected to see approximately 1,44,315 units delivered in 2024, against approximately 1,14,280 units in 2023

Sohna Road and Dwarka saw a 3% and 2% increase in rent, respectively, so far this quarter.

Rents in Hyderabad and housing supply

Hyderabad's HITECH City and Gachibowli saw average rents rising by 3% each in April-June 2024 to date over the preceding quarter. In January-March 2024, the quarterly average rent hike in both these markets was 5%. Hyderabad is slated to see approximately 34,770 units completed 2024-end; in 2023, approximately 20,500 units were completed.

MMR rentals and supply

Average housing rent in MMR's key markets Chembur and Mulund rose by just 2% against the preceding quarter (Q1 2024). In January-March 2024, it rose by over 4% against Q4 2023. Among the top 7 cities, MMR is slated to see the highest completions at approximately 1,60,900 units in 2024. In 2023, the region saw approximately 1,43,500 units completed.