Bengaluru sees highest rental yield as work from office becomes the norm

Bengaluru, 29 April: Bengaluru tops the list of garnering the highest rental yield in January-March period as the IT professionals rejoin offices with IT companies mandating work from offices.

According to real estate consultancy firm ANAROCK, the IT capital has witnessed the highest rental yield of 4.45 per cent in Q1 of 2024. Rental yield is the annual ROI (return on investment) investors earn from capital invested in a property.

This was followed by Mumbai, where rental yields stood at 4.15 per cent, while Gurgaon’s yield was at 4.1 per cent. Among major cities, Pune’s rental yield stood at 3.85 per cent and Hyderabad’s rental yield was at 3.2 per cent, the firm said in a report.

“Residential rental yields in India had chronically stagnated before the Covid-19 pandemic, with the national average at just 3 per cent for many years. With post-pandemic rental demand soaring after offices resumed, rental yields are heading north too. IT-dominated cities including Bengaluru, Gurugram, Pune and Noida, and also MMR, have seen considerable upticks in their rental values, and therefore yields,” Santhosh Kumar, Vice Chairman of ANAROCK Group said.

According to the real estate consultancy firm, residential rental values in top cities have surged after the pandemic, with 2023 seeing them soar by over 30 per cent year-on-year. In the last quarter of 2023, rental values stabilized in most cities as renting activity usually becomes low during this period. However, the rental real estate market picked up momentum again in the first quarter of 2024, the company said in a release.

"Going by the current momentum, there are no immediate prospects of the rental inflation trend slowing down. In fact, it is expected to pick up in the next few quarters, as rental activity typically remains high in the first two quarters of as fiscal year," Kumar added.

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