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Housing Rentals in key Luxury Markets See Better Y-o-Y Growth: Report

Rental Appreciation Trumps Capital Price Growth in Top Luxury Markets Since 2014 says a report by ANAROCK Property Consultants. Avg. rentals (for a min. 2,000 sq. ft. home) in top 7 cities' key luxury markets rose 17-26% in 7 years (2014 to 2020); avg. capital prices rose max. 15% in the same period, it says.

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Amidst various industry reforms in the last seven years, multiple new trends emerged in the Indian residential real estate market. Strikingly, housing rentals in key luxury markets saw better y-o-y growth between 2014-2020 than average capital prices in the same localities.

Anuj Puri, Chairman - ANAROCK Property Consultants says, "The average rentals for a house of minimum 2,000 sq. ft. size in the top 7 cities' key luxury hotspots rose anywhere between 17% to 26% in 2020, as compared to 2014. In the same period, average capital prices in these micro-markets saw a maximum rise of 15% - and some even saw a marginal dip."

To illustrate - ANAROCK data indicates that the average monthly rentals in Gurugram's Golf Course Road increased by 17% in 2020 over 2014, while average property prices in the same period declined marginally – from INR 13,167 per sq. ft. in 2014 to INR 13,150 per sq. ft. in 2020.

Among the top 7 cities, Hyderabad’s HITECH City saw the highest rental appreciation of 26% between 2014 and 2020; in the same period, average property prices saw a 12% jump. "ANAROCK data also reveals that from 2014 to 2020, rental prices in the top luxury markets saw consistent y-o-y growth – averaging between 3-6% annually," says Puri. "In contrast, capital appreciation in this period either remained range-bound or varied each year. Some years saw a decent yearly rise, even as high as 7%, while prices dropped by approx. -5% in other years - particularly in 2017, when many micro-markets saw capital prices plunge against the preceding year.”

In 2017, various structural reforms like RERA and GST were implemented. After this period, most localities only saw a marginal capital price rise averaging between 1-3% - while rental markets continued their growth run. Due to the pandemic, 2020 was an outlier year for Indian rental markets, with most luxury localities recording either no change in average monthly rentals (compared to the preceding year) or seeing some decline. Without a doubt, COVID-19 impacted luxury rental markets amidst the growing WFH culture. Average property prices showed little or no change in 2020 over 2019.

Top Luxury Hotspots – Rental vs Capital Price Changes: The luxury residential rental market saw a setback due to COVID-19, but now appears to have recovered with demand for rental luxury properties back almost to pre-COVID levels. Monthly rentals in some of the localities have begun heading north. With vaccinations now rolling out and positivity returning, these rental markets will pick up new momentum.

Some of the prominent luxury markets in the top 7 cities that performed well between 2014 and 2020 may see further short to mid-term boosts:

  • In Bengaluru, the luxury residential hotspot JP Nagar saw avg. monthly rentals appreciate by 24% in 2020 over 2014, while capital prices in the period rose by 8%. Likewise, Rajajinagar saw rental prices rise by 22%, and capital prices by 15%.
  • In MMR, luxury rentals in Tardeo rose 23% in this period, while capital prices increased by 8%. Similarly, in Worli, the average monthly rentals for a minimum 2,000 sq. ft. area home rose by 21%, while capital prices rose by 6%.
  • In NCR, rentals in luxury hotspot Golf Course Road increased by 17% while capital prices saw a meagre decline. In contrast, Golf Course Extension Road saw rentals increase by 18% and capital prices by 7% in this period.  
  • In Chennai, luxury rentals in Anna Nagar rose 17% in this period, while capital prices increased by 10%. Similarly, in Kotturpuram, the average monthly rentals rose by 19% while capital prices rose by 7%.
  • In Hyderabad, the luxury residential hotspot Jubilee Hills saw avg. monthly rentals appreciate by 15% in 2020 over 2014, while capital prices in this period rose 10%. HITECH City saw the maximum rental price rise of 26%, while capital prices increased by 12%.
  • In Pune, the rentals in Koregaon Park rose 19% in this period, while capital prices increased by 14%. Similarly, in Prabhat Road, the average monthly rentals rose by 23% while capital prices rose by just 5%.
  • In Kolkata, luxury home rentals in Alipore rose 20% in 2020 against 2014, while capital prices increased by 13%. Similarly, in Ballygunge, the average monthly rentals rose 19% while capital prices rose by 13%.

 

Avg. Monthly Rentals: Top Luxury Markets (For 2,000 sq. ft. area)

City

Micro Market

2014 (INR)

2020 (INR)

% Appreciation (2020 vs 2014)

Bangalore

JP Nagar

37,000

46,000

24%

Bangalore

Rajaji Nagar

46,000

56,000

22%

Chennai

Anna Nagar

48,000

56,000

17%

Chennai

Kotturpuram

62,000

74,000

19%

Hyderabad

Jubilee Hills

47,000

54,000

15%

Hyderabad

HiTech City

42,000

53,000

26%

Kolkata

Alipore

50,000

60,000

20%

Kolkata

Ballygunge

74,000

88,000

19%

MMR

Tardeo

2,20,000

2,70,000

23%

MMR

Worli

1,65,000

2,00,000

21%

NCR

Golf Course Ext. Rd

42,500

50,000

18%

NCR

Golf Course Rd

60,000

70,000

17%

Pune

Koregaon Park

50,000

59,500

19%

Pune

Prabhat Road

52,000

64,000

23%

Source: ANAROCK Research

 

Avg. Capital Prices: Top Luxury Micro Markets

City

Micro Markets

2014 (INR/sft.)

2020 (INR/sft.)

% Appreciation (2020 vs 2014)

Bangalore

JP Nagar

5,259

5,698

8%

Bangalore

RajajiNagar

11,534

13,300

15%

Chennai

Anna Nagar

10,288

11,300

10%

Chennai

Kotturpuram

12,650

13,500

7%

Hyderabad

Jubilee Hills

6,300

6,950

10%

Hyderabad

HiTech City

5,088

5,675

12%

Kolkata

Alipore

11,500

13,000

13%

Kolkata

Ballygunge

10,005

11,350

13%

MMR

Tardeo

38,717

41,862

8%

MMR

Worli

36,388

38,560

6%

NCR

Golf Course Ext. Rd

7,778

8,300

7%

NCR

Golf Course Rd

13,167

13,150

0%

Pune

Koregaon Park

9,794

11,128

14%

Pune

Prabhat Road

11,850

12,500

5%

Source: ANAROCK Research


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