Bengaluru Rental Market Soars Amid Job Boom and Remote Work Reversal

Strategic Insights -

The rental market in Bengaluru has seen a significant surge since 2022, driven by various factors including the influx of new companies, reversing remote work policies, and a growing student population. The city's attraction to students and young professionals, as well as its reputation as the "San Francisco of India," has led to increased demand for housing. The average monthly rentals for 2BHKs have increased by 67% between 2021-end and the first half of 2024, with some areas experiencing even more dramatic increases.

Key Takeaways:

  • The rental growth in Bengaluru has been the highest among large Indian cities, with a 67% increase in average monthly rentals for 2BHKs between 2021-end and the first half of 2024.
  • Areas close to the IT corridor, such as east Bengaluru and northeast, have experienced the most dramatic increases, with house rents skyrocketing in the central Bengaluru district (CBD), Indiranagar, and Koramangala.
  • The robust job market and companies demanding that employees work from office have led to this trend, with Amazon CEO Andy Jassy issuing a return-to-office mandate.
  • Millennials prefer shared apartments over PG accommodations due to greater freedom and privacy, despite higher rents, with the average cost of living for students in Bengaluru ranging between Rs 20,000 and Rs 30,000 per month.
  • The supply of housing for middle-income renters has not kept pace with demand, leading to steep rentals and longer commutes for many people.
  • The market is stabilising, with new housing supply gradually coming in, indicating a tapering off of rental increases.

Statistics:

  • 67% increase in average monthly rentals for 2BHKs between 2021-end and the first half of 2024 (Anarock's report)
  • Average monthly rentals for 2BHKs increased from Rs 21,000 to Rs 35,000 (Anarock's report)
  • Annual rental increases typically tend to be between 5% and 10%
  • 13,000-Rs 20,000 per occupant is the rent for shared apartments
  • Rs 20,000 to Rs 30,000 per month is the average cost of living for students in Bengaluru
  • Rs 60,000-Rs 70,000 per month or more can be earned by a 3BHK if packed with multiple tenants

Sources:

  • Anarock's report
  • Interview with BS Nesara, chairman of real estate company Concorde
  • Interview with San Francisco of India
  • Interview with Chintan Kothari, partner in Settler Real Estate Consultants
  • Interview with Saurabh Garg, co-founder and chief business officer of NoBroker