Bengaluru records highest returns for landlords in Q1 2024: Anarock

Bengaluru: At 4.45%, Bengaluru recorded the highest rental yield amongst the top-7 cities in India during the first quarter of the ongoing calendar year, according to a new report released by property consultancy Anarock on Monday. This marked a 24% jump compared to 2019 levels when the metric hovered around 3.6%.

Amid a strong post-pandemic rental demand, rents in key areas of the city have been ‘rising inexorably’ as techies return to offices, the report noted.

Rental yield refers to the percentage of a property’s value received over a year through rental earnings.

The average monthly rent of a 1,000-square foot standard 2 bedroom, hall and kitchen flat on Sarjapur Road in the first quarter of 2024 amounted to Rs 34,000, up 8% from Rs 31,600 in the October-December period.

Similarly, Whitefield saw average rental values rise to Rs 32,500 in Q1 2024, from Rs 30,200 in the previous quarter. According to the report, the top localities in Bengaluru registered a staggering uptick of 40% and above in rents between 2022-end and Q1 2024.

The garden city has also been in the spotlight for its soaring property prices. According to a Knight Frank India report released earlier this month, average residential real estate prices in Bengaluru grew 9% year-on-year during the first quarter, only second to Hyderabad at 13%. When compared to the October-December 2023 period, prices saw the highest growth in Bengaluru at 4%.

Mumbai grabbed the second spot with a rental yield of 4.15% during the period under review, followed by Gurugram at 4.1%.

Overall, in the prominent localities of the top markets, rental yields recorded a 4-9% rise during the January-March period. "Considering that the typical annual increase is 5-10%, this is very significant and while it certainly bodes well for landlords, it signifies a worrisome element of cost-of-living inflation for tenants," the report underscored.

"Going by the current momentum, there are no immediate prospects of the rental inflation trend slowing down," said Anarock Group Vice Chairman Santhosh Kumar, adding that it is expected to pick up in the next few quarters, as rental activity typically remains high in the first two quarters of a fiscal year.