As real estate continues to thrive post-COVID, housing rents have surged by a substantial 25–30% in top micro-markets within major cities since 2019. According to recent trends mapped by the real estate tech platform Housing.com, average monthly rents for residential properties have experienced a notable uptick of 15-20% across the major top 8 cities compared to the pre-pandemic era of 2019.
This surge in rents has contributed to a modest enhancement in rental yields. Despite these positive trends, there remains a considerable gap to bridge when compared to global real estate hubs such as New York, London, Dubai, and Singapore, says a report by Housing.com.
While property prices in top cities saw a 15–20% growth compared to pre-pandemic levels of 2019, average monthly asking rents skyrocketed by 25–30%, with certain key localities in service sector-dominant cities witnessing significant rent spikes exceeding 30% during the same period, claims the report.
Also read: Mumbai Metropolitan Region real estate market continues booming in the fourth quarter of 2023
Not only median rents, but there is also a surge in demand for renting a home post-pandemic, as indicated by Housing.com's IRIS index.
The index, which gauges upcoming demand by tracking the online search activity on the platform, indicates that post-pandemic online rental search activity has surged ahead of buying activity. Currently, the IRIS index for rent is trending 23 points higher than the buying index, the report added.
Source: Residential Rents on the Rise! A report on rental property in India 2024, Housing ResearchTalking about trends and growth, Dhruv Agarwala, Group CEO of Housing.com, PropTiger.com & Makaan.com, states, “Post-pandemic, there has been a sharp revival in housing demand, both for buying and renting purposes. The housing market has witnessed price appreciation in the last two years after almost a decade of stagnation. The average price rise has been modest at a city level, but there has been a sharp rise in some major locations of top cities."
Furthermore, Agarwala adds, “Rental returns in India historically trailed global counterparts due to factors like higher interest rates and acquisition costs. However, post-pandemic dynamics, including rising property values, affordability challenges for potential buyers, and a limited supply of ready inventory, have sparked a significant surge in rental demand. We see notable spikes to the tune of 25–30% in CBDs of service sector-dominant cities like Gurugram, Bengaluru, Pune, and Hyderabad.”
“Looking ahead, with fresh ready supply set to hit the market only in the next 2–3 years, we expect the momentum in rental demand to persist. This sustained growth has piqued the interest of both mid and long-term investors alike, signaling promising opportunities in the rental market,” says Ankita Sood, Head of Research at Housing.com.
Housing.com Research has also computed the price-to-rent ratio to compare rental returns in India’s key housing market with major global cities. The price-to-rent ratio is determined by dividing the median property value by the median annual rent price within a specific geographical area.
A lower price-to-rent ratio means higher rental yield or return on investment for property owners. This ratio helps in evaluating the comparative affordability of renting versus purchasing a property.
Price-to-rent ratio – World Vs India
| Sr no | City | Country | Price-to-Rent Ratio |
| 1 | New York | United States | 17 |
| 2 | Tokyo | Japan | 42 |
| 3 | London | United Kingdom | 24 |
| 4 | Dubai | UAE | 15 |
| 5 | Paris | France | 31 |
| 6 | Seoul | South Korea | 40 |
| 7 | Singapore | Singapore | 23 |
| 8 | Sydney | Australia | 29 |
| 9 | Mumbai (MMR*) | India | 35 |
| 10 | New Delhi | India | 37 |
| 11 | Noida | India | 33 |
| 12 | Gurugram | India | 36 |
| 13 | Pune | India | 31 |
| 14 | Hyderabad | India | 25 |
| 15 | Bengaluru | India | 25 |
| 16 | Melbourne | Australia | 21 |
| 17 | Hong Kong | China | 36 |
*Mumbai Metropolitan Region includes Mumbai, Thane and Navi Mumbai.
Source: Residential Rents on the Rise! A report on rental property in India 2024, Housing Research
Price-to-rent ratio: The price-to-rent ratio is determined by dividing the median home price by the median annual rent price within a specific geographical area. This ratio serves as a crucial tool for evaluating the comparative affordability of renting versus purchasing a property, as well as estimating potential rental returns on real estate investments. A lower price-to-rent ratio implies a higher likelihood of favorable rental returns. Conversely, a higher ratio signals reduced rental returns, suggesting a less favorable environment for property investment. The ratio can be used by potential homeowners and tenants in affordability assessment and in renting versus buying decisions, while investors can leverage it to make strategic decisions. In a city, a price-to-rent ratio of 1-15 indicates that owning is much cheaper than renting, while a ratio of 16-20 implies higher ownership costs, and a ratio of 21+ signifies significantly greater homeownership expenses compared to renting.
(Edited by : Anand Singha)
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