The average rent across major Indian cities grew by 5.5 per cent in Q3 of 2022. According to the Magicbricks Rental Index for the third quarter of 2022, the aggregate rental demand (searches) surged by 29 compared to last year. The opening up of the offices after the effects of the COVID-19 pandemic may be attributed as one of the biggest factors behind the spike in rental demand.
Three major Indian cities recorded a quarter-on-quarter increase in rent greater than the national average. Bengaluru leads the index, with quarter-on-quarter rent rising by 7.3 per cent. It was followed by Mumbai, with an increase of 6.6 per cent. The Greater Noida region came close, recording an average 6.3 per cent rise in rent rates. The percentage of increase in Hyderabad was on par with the national average.
The report also stated that delays in delivering under-construction houses are impacting the availability of rental units. Furthermore, most homebuyers are acquiring units for residential purposes rather than investments.
The rise in rent is also pushed by a decreasing supply of such units across the country. The pan-India rental housing availability fell by 9.8 per cent QoQ, data from 13 Indian cities revealed. Chennai witnessed a QoQ fall of 1.9 per cent, the lowest in the country. Hyderabad and Delhi had the second and third lowest drop in availability of rental housing units at 4.8 and 5.2 per cent, respectively.
While supply is decreasing, demand for such rental units in major cities in India has witnessed a drop in the third quarter. In Bengaluru, for instance, demand dropped by 7.8 per cent, accompanied by a supply decrease of 12.6 per cent. The overall rental activity in housing in the country has remained subdued in Q3 compared to the first two quarters of the year.
In Chennai, supply only recorded a marginal drop of 1.9 per cent compared to the 5.6 per cent decline in rental units’ demand. The city’s average rate still climbed up by 2 per cent QoQ. In Delhi, on the other hand, the trend is somewhat reversed, with the demand registering a small dip of 2.6 per cent QoQ and supply dipping by a bigger proportion- 5.2 per cent QoQ. The city’s average rent shot up by 3.1 per cent QoQ.
The country’s financial capital, Mumbai, noted a relatively steeper supply decline at 11.8 per cent QoQ. Here the average demand also dropped by 5.1 per cent quarter on quarter.
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