Rentals in prime micro-markets surge on rising demand for larger homes

Renting costs in prime residential micro-markets in Mumbai, Delhi, Bengaluru, Noida, and Gurugram have surged by up to 35% in 2023, driven by the resumption of normal office routines by corporate employees who had chosen to work from non-metro locations through the Covid years. Central Delhi, Golf Course Road, and Dwarka Expressway in Gurugram have witnessed the highest appreciation of 35% while in Mumbai, rentals have increased by 19%.

As per Savills India, cities are observing a rise in average rental values due to the increasing demand for leasing larger homes, with improved amenities gaining momentum. “The limited availability of luxury properties in prime areas like Lutyens, South Delhi, Golf Course Road, and other upscale neighbourhoods in the NCR region and other major cities has driven rental rates up by 30-40% in the past couple of years,” stated Ashwin Chadha, CEO of India Sotheby’s International Realty.

The opening of metro lines 2A and 7 between Dahisar and Andheri has boosted demand for rental homes, particularly in the western suburbs’ micromarket.

The market saw substantial demand for rental homes in Kandivali and Borivali from students travelling by metro to colleges in Andheri and Vile Parle, resulting in an 8% year-on-year increase in rental rates.

“Delhi’s marque locations also have a captive demand from embassies, and luxury homes in these areas find quick takers. Bungalows in Lutyens Zone, Delhi, were being leased out around ₹10-12 lakh per month sometime ago, and now luxury apartments and high-end condos in Delhi NCR and Mumbai MMR are being rented for ₹14 lakh per month and above,” Chadha said. In Delhi, average rental values increased by 26% year over year in 2023.

The Central Delhi micromarket witnessed the highest annual growth in rentals at 35%, followed by the South East and South Central micromarkets, which observed a 25% year-over-year increase.

In Gurugram, average rentals witnessed an increase of 27% YOY across all markets.

Dwarka Expressway and Golf Course Road saw the highest rise in rentals, with 36% and 30% YOY growth, respectively.

In Noida, some micromarkets reported 7% year-over-year growth.

As the residential market gains momentum and capital values experience a surge in recent months, buyers are motivated to make purchasing decisions, anticipating a continued strengthening of property prices.

While average rents at city level in Mumbai grew by 5.8% YoY, South and North Bengaluru saw the highest rental growth of 6-7% YOY in premium residential developments. The rental market for premium housing in key localities like MG Road, Indira Nagar, Koramangala, etc. in Central Bengaluru remains robust, with rents that are significantly higher than the average rents in the other micro-markets.