Rental values in Indian IT hubs surge by 31% in 2023

In the post-pandemic rebound, housing rents have continued their upward trajectory in India's top 7 cities, primarily driven by the thriving IT/ITeS hubs of Bengaluru, Hyderabad, and Pune. According to the latest data from ANAROCK Research, residential rentals in Bengaluru's prominent areas witnessed an impressive 30 per cent surge during the first nine months of 2023 (9M 2023).

The rental growth was particularly evident in areas like Whitefield and Sarjapur Road. A standard 2BHK flat of approximately 1,000 sq. ft. in Whitefield saw rents increase by an astounding 31 per cent during 9M 2023, while Sarjapur Road recorded a significant 27 per cent rise in rents during the same period. 

For example, the average monthly rent for a standard 2BHK home of 1,000 sq. ft. in Whitefield grew from Rs 24,600/month at the end of 2022 to Rs 28,500/month by September 2023. Similarly, in Sarjapur Road, average monthly rents climbed from Rs 24,000/month at the end of 2022 to Rs 30,500/month by September 2023.

Hyderabad: Second strongest market 

Hyderabad emerged as the second-strongest market for rental value growth, with key areas in the city experiencing up to a 24 per cent surge in rental values during the same period. Notably, IT/ITeS hubs like HITECH City and Gachibowli saw substantial rental growth. In HITECH City, the average rents increased by 16 per cent from Rs 24,600/month at the end of 2022 to Rs 28,500/month by the end of Q3 2023. 

Gachibowli witnessed a remarkable 24 per cent increase in rents during the same period, with average monthly rents rising from Rs 23,400/month to Rs 29,000/month by September 2023.

Pune also stood out as a city with substantial rental value growth. The Hinjewadi micro-market recorded a 17 per cent increase in rental values during the last nine months. In Hinjewadi, average rents went from Rs 21,000/month at the end of 2022 to Rs 24,500/month by September 2023.

Anuj Puri, Chairman of ANAROCK Group, commented on this resurgence, stating, "After an almost terminal downturn during the first and second waves of the Covid-19 pandemic, residential rents have become one of the most remarkable comeback stories in the post-pandemic housing sector. The first nine months of 2023 have seen housing rents soar by over 30 per cent in the top 7 cities. Bengaluru, already in the limelight for its astronomic rental values post-Covid-19, continues to stand out among the top 7 cities. The fact that the next two hotspots for rental value growth are also IT/ITeS-centric cities underscores the fundamental strength of the Indian Infotech sector, despite belt-tightening moves in the industry."

However, Puri also anticipates that rental values may stabilise in most cities during the ongoing quarter, as the last quarter of the year traditionally experiences lower demand for renting. He expects rents to regain momentum in the January to March period when Indians usually relocate for better job opportunities amid increased hiring in the new financial year.