India’s housing market is experiencing a shift in the’rent or buy’ dilemma, with capital values in key micro markets across the top seven cities rising by 128% between the end of 2021 and the end of 2024. However, rental values in many of these micro markets have not kept pace with this steep rise, appreciating at a much lower rate.
Major cities like Bengaluru, MMR, NCR, and Hyderabad have seen average capital values rise higher than rental values, while localities in Pune, Kolkata, and Chennai saw the reverse trend – rental values appreciated more than capital values.
Top markets where capital value growth outpaced rental value growth between 2021-end and 2024-end include NCR’s Sohna Road, Sector-150 in Noida, Mumbai’s Chembur, Mulund, Hyderabad’s HITECH City and Gachibowli, Bengaluru’s Thanisandra Main Road, and Sarjapur Road.
However, key micro markets in Pune, Kolkata, and Chennai saw higher rental values growth than capital value appreciation between 2021-end to 2024-end. This indicates that homeownership is becoming more lucrative in key markets where property values are rising faster than rental yields.
The Indian real estate sector has witnessed a remarkable surge in capital values across the top seven cities, outpacing rental growth significantly. According to a recent report by ANAROCK, capital values in these cities have soared by an impressive 128% since 2021, driven by strong demand, limited supply, and positive market sentiment.
Rising Capital Values Across Major Cities
The seven cities covered in the report include Mumbai, Delhi-NCR, Bengaluru, Chennai, Hyderabad, Pune, and Kolkata. The surge in capital values has been fueled by multiple factors such as rising construction costs, increased demand from homebuyers, and a growing inclination towards property investments as a hedge against inflation.
Mumbai, Delhi-NCR, and Bengaluru have led the charge, with price appreciation in prime locations exceeding the overall average. Chennai, Pune, and Hyderabad have also reported significant growth in capital values, while Kolkata has shown a steady rise due to improving infrastructure and increased real estate activity.
Rental Growth Lags Behind
Despite the sharp rise in capital values, rental growth has not kept pace, increasing at a comparatively moderate rate. The report highlights that while rents have seen upward movement due to rising demand for housing in urban centers, they have grown at a much slower rate than property prices.
A key reason for this disparity is that homebuyers, encouraged by low home loan interest rates in previous years, have preferred purchasing over renting. Additionally, supply constraints in key micro-markets have further contributed to the capital value surge.
Factors Driving the Capital Value Surge
- Post-Pandemic Demand Surge: The COVID-19 pandemic reshaped homeownership preferences, leading to a significant increase in demand for residential properties. Real estate has remained a preferred asset class for investors, with institutional and individual investors driving price appreciation.
- Limited New Supply: Delays in project completions and reduced new launches due to regulatory approvals have resulted in a supply-demand imbalanc The rising cost of raw materials such as cement, steel, and labor has pushed up overall property prices.
Market Outlook and Future Trends
While capital values are expected to remain on an upward trajectory, rental growth is likely to catch up as demand for leased properties rises, especially in metro cities where affordability becomes a concern. The trend of rental yield improvement is anticipated in 2024 and beyond as businesses expand and urban migration continues.
According to ANAROCK, the housing market in India remains robust, with continued investor interest and end-user demand driving price movements. With infrastructure projects, improved connectivity, and government incentives, the long-term outlook for the real estate sector remains positive.
The 128% surge in capital values in India’s top seven cities since 2021 reflects strong market fundamentals and investor confidence. However, the gap between capital appreciation and rental growth highlights a crucial market dynamic that could influence future real estate trends. As affordability concerns rise, rental demand is expected to gain momentum, balancing the overall real estate landscape in the coming years.
Group Media Publication
Construction, Infrastructure and Mining
General News Platforms – IHTLive.com
Entertainment News Platforms – https://anyflix.in/