At a time when residential real estate in India is seen to be recovering, leaving behind a slowdown that affected the sector for about five years, the country’s rental housing market is also showing signs of growth, with some key markets registering rental yields of over 4%, suggests the data trends by makaan.com, owned by Elara Technologies Pte Ltd, that also owns Housing.com and Proptiger.com. A recent study conducted by makaan.com showcase that 10 of 12 Tier-I cities in India witnessed landlords earning rental yields* of over 3% in July 2018. When compared to the rental yield in July 2017, the yield expansion was as high as 0.7% for Ahmedabad and) 0.4% in Chennai.
Tier-I cities included in the analysis are Ahmedabad, Bengaluru, Chennai, Delhi, Ghaziabad, Gurugram, Hyderabad, Kolkata, Noida, Pune, Faridabad and the Mumbai Metropolitan Region (MMR).
Ankur Dhawan Chief Investment Officer, PropTiger.com said, “Though capital values of property have dropped across the country, rentals have increased. This has improved rental yields for landlords. There is also additional trend of managed rentals and co-living which is improving rental yields for landlords.”
Cities in focus
- While rental real estate markets in Ahmedabad, Bengaluru and Kolkata reported the highest rental yield of 4.2% each in July, Hyderabad followed closely at 4%.
- Ahmedabad registered the highest jump of 0.7% in annual rental yield during this period.
- Faridabad witnessed the highest drop of 0.7% in rental yield, from 3.4% in July 2017 to 2.7% in July 2018.
- At 3% in July 2018, Delhi’s rental yield in July this year was 0.1% lower than the same month last year. In the MMR, rental yield remained unchanged year-on-year at 2.8%.
Locality in focus
- A locality-wise analysis shows that while the average rental yield was around 4.2% in Bengaluru, it was higher in certain localities. In Brookefield, for example, rental yield was 4.9% in July
- Properties along Sarjapur Road observed an expansion of 1.1% in rental yield as compared to July 2017.
- Most localities in Chennai have also shown positive change in the last one year in rental yield. OMR, for example, witnessed the highest rental yield of 4.4% in Jul 2018, followed by properties along GST, at around 4%.
- Localities of Hyderabad West such as Gachibowli witnessed a rental yield of upto 5.2% in July, higher than the city average of 4%.
- Most areas in Ahmedabad saw rental yield growing in the past one year. While properties along SG Highway reported the highest rental yield of 4.4% in July 2018 as compared to 3.2% in the same month last year, properties in North Ahmedabad witnessed a rental yield of 4.3% in the same period.
- In Kolkata, properties along EM Bypass have a rental yield of 4.3%, higher than the city average, with an annual expansion of 0.6%.
- Despite a slow average expansion, localities in beyond-Thane and Navi Mumbai have been performing better than Mumbai suburbs in terms of rental yield. Properties beyond-Thane reported a rental yield of 3.7%, followed by Navi Mumbai at 3.3%.
- Rental yield was in the range of 2.5% - 3.7% in Pune. In the eastern localities of the city such as Wagholi, Kharadi and Undri, however, rental yield decreased by 0.7% year-on-year.
- In the national capital region, properties in Noida Extension were offering rental yields in the range of 2.8-3.3%. Properties near City Center and Noida Expressway have the highest rental yield of 3.4%.
- In Gurugram, where no change was seen in annual rental yield at 3.1%, the top-gaining locality was Golf Course Road, where yield was up to 3.5%. Indirapuram, on the other hand, reported a rental yield of only 2.7% in July 18, which was 0.3 per cent lower than last year.