Homebuying Likely to Surge as Gross Rental Yield Reaches 3.62%: Magicbricks Report

The Indian rental market is witnessing notable growth, with the average gross rental yield across 13 major cities reaching 3.62%, according to a report by Magicbricks. This marks a significant transformation in the real estate landscape, with rental yields climbing steadily and attracting increased interest from investors.

Growth in Rental Yields

Cities such as Chennai and Delhi have outpaced the national average in rental yield growth. Chennai recorded an impressive 21.3% quarter-on-quarter (QoQ) increase in rental yields, while Delhi reported an 8.8% rise during the same period. These trends signal growing confidence in the rental market, with investors increasingly viewing residential properties as lucrative investment opportunities.

“For decades, homebuyers primarily sought properties for personal use or as a primary residence,” said Prasun Kumar, Chief Marketing Officer of Magicbricks. “However, today’s dynamic real estate market is shifting that trend, with residential investments offering better returns. Encouraged by rising rental yields, we expect many buyers to explore multiple property investments, even leveraging loans to do so.”

Emerging Investment Destinations

Interestingly, cities traditionally not seen as prime real estate investment hubs are now leading in rental yields. Ahmedabad, Hyderabad, Kolkata, and Pune have demonstrated robust growth, even surpassing established markets like Bengaluru and Delhi.

Ahmedabad boasts the highest rental yield among the analyzed cities, at 3.9%. Average monthly rents in the city increased by 16.9% year-on-year (YoY), reaching Rs 19.35 per square foot (psf). With property prices averaging Rs 5,927 psf, the city combines affordable property rates with strong rental demand, making it a top choice for investors seeking solid returns.

Hyderabad has emerged as another key market, with its rental yield rising from 3.5% in Q2 2024 to 3.7% in Q3 2024. Monthly rents surged by 28.2% YoY to Rs 25.17 psf, while property prices grew by 6.2% YoY to Rs 8,188 psf. The city’s growth is fuelled by a thriving job market in its expanding tech and business sectors, attracting tenants and driving demand.

Kolkata also reported strong performance, with a rental yield of 3.7%. The city’s average monthly rent increased by 12.9% YoY to Rs 22.14 psf, supported by steady growth in property prices. With its affordable living options and expanding job opportunities, Kolkata continues to attract both investors and tenants.

The current market dynamics present a lucrative opportunity for investors to capitalize on rising rental income and property value appreciation. Cities like Ahmedabad and Hyderabad are particularly appealing due to their affordability and growing demand.

The report emphasizes that the rental market’s growth reflects a larger shift in homebuying trends, with investors increasingly seeking properties not just for personal use but as profitable investments.