Rental values in top 7 cities increases by 72% in 3 years

Rental values in key micro-markets of the top 7 cities have surged by 72% between the end of 2021 and the first half of 2024, while capital values saw more moderate growth, driven by increasing migration to urban centres, according to Anarock. Cities like Bengaluru, Pune, Kolkata, and Chennai witnessed higher rental value increases than capital value growth. At the same time, NCR, MMR, and Hyderabad experienced the opposite trend, with capital values appreciating more than rental values. Regional Director and Head of Research at Anarock Group, Mr. Prashant Thakur, highlighted that this data can be important in deciding whether to buy property or rent. However, it is not the only consideration. He noted that some individuals migrating for job opportunities may not intend to settle permanently. In contrast, others value investing in property regardless of their long-term plans.

He further explained that factors such as financial capacity, job prospects, life stage, family size, and personal preferences also play a role in the decision to buy or rent. For example, an individual in Bengaluru paying US$ 597.39 (Rs. 50,000) in monthly rent for a 2 BHK worth Mr. Prashant Thakur, US$ 143,369 (Rs. 1.2 crore) may find it more profitable to buy the property if they can afford a 20% down payment and take a home loan at a 9.5% interest rate over 10 years. This shift towards homeownership gained momentum during the pandemic, as many sought the security of owning a physical asset. With current home loan interest rates between 8.75% and 9.5%, more tenants view rent as an expense and EMIs as an investment in a stable asset.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.