Residential rental growth in key micro markets across India’s top cities has slowed significantly in the second quarter of calendar year 2024, signalling a shift in the country’s real estate dynamics. Rental prices have risen a modest 2-4% during April-June, compared to a 4-9% growth in the first quarter, according to latest data from property consultant Anarock.

This slowdown can be attributed to a substantial influx of new housing supply into the market, which has tempered previously overheated rental markets, Anarock said.

“In India, the second quarter of most years typically sees rents increase more than in other quarters due to the commencement of the new academic year and the employment of new staff. This year, declining rental value growth coincides with substantial new housing supply entering these markets,” explained Santhosh Kumar, vice chairman, ANAROCK Group.

New housing supply

The top seven cities are set to deliver approximately 531,000 new units in 2024, compared to 435,000 units in 2023, representing a 22% annual increase in supply if delivery schedules remain on track. This surge in new housing units is cooling down previously speculative rental spikes.

Among the cities, Bengaluru’s Whitefield and Noida’s Sector 150 have witnessed the highest quarterly growth, each recording a 4% sequential increase in Q2 2024. Average rents for a standard 1,000 sq.ft. 2 BHK in Whitefield have risen from approximately ₹32,500 a month in January-March of 2024 to ₹35,000 a month in the current quarter to date. In Q1 2024, the quarterly rise against Q4 2023 was 8%.

Similarly, in Noida’s Sector 150, average rents increased from ₹24,000/month in Q1 2024 to ₹25,000/month in the current quarter, showing a 4% rise compared to a 9% increase in Q1 2024 against Q4 2023. Other markets, such as Sohna Road and Dwarka, saw quarterly rent increases of 3% and 2%, respectively, in Q2 2024, compared to 4% and 6% in Q1 2024.

Mumbai Metropolitan Region’s (MMR) key markets, Chembur and Mulund, experienced a 2% rise in average rents in Q2 2024, down from over 4% in Q1 2024. Hyderabad’s HITECH City and Gachibowli saw average rents increase by 3% each in Q2 2024, compared to a 5% rise in Q1 2024.

Meanwhile, even as rental growth has slowed in the second quarter of 2024, the Indian residential market remains robust, as evidenced by the influx of new housing supply.