According to a report by Magicbricks, rental demand in 13 major cities in India increased by 18.1 percent in the second quarter of calendar year 2023 (Q2 CY2023), while rents increased by 4.9 percent compared to the previous quarter.

The report, titled “Rental Index for April-June 2023,” also pointed out that supply increased by 9.6 percent in the second quarter.

The National Capital Region or NCR (27.25 percent), the Mumbai Metropolitan Region or MMR (18.35 percent), Pune (19.3 percent), Hyderabad (22 percent) and Bengaluru (12.8 percent) recorded the highest Increase in rental demand.

The report also found that cities like Bengaluru (8.1 percent), Navi Mumbai (7.3 percent) and Gurugram (5.1 percent) saw the highest QoQ increases in median rents. However, Delhi (-0.9 percent) and Mumbai (-0.1 percent) both saw a modest decline in rents compared to the previous quarter.

“The return to office culture increased the need for housing close to work, while educational institutions resumed in-person activities and students moved back to city centers. As property values ​​soared, homeowners seized opportunities for profitable property sales rather than rental properties, which reduced supply. “This, coupled with high demand, led to significant rent increases in key Indian cities,” said Sudhir Pai, Chief Executive Officer ( CEO) of Magicbricks.

1BHK and 2BHK units are in demand

The report states that demand for 2-BHK units remains unchallenged, accounting for a significant 53 percent share of both demand and supply, followed by 1-BHK (27 percent) and 3-BHK shares (18 percent).

Demand for 3-BHK units decreased from 36 percent in Q1 2023 to 18 percent in Q2 2023, while demand for 1-BHK units increased from 17 percent in Q1 2023 to 27 percent in Q2.

This shift underscores a growing trend towards compact housing, the report added.

The report concludes that in addition to proximity to employment hubs, affordability is a key driver of demand this quarter.

Rental accommodation with a monthly rent ranging from 10,000 to 20,000 rupees proved to be the preferred choice among tenants. “These preferences were observed predominantly within units with a covered area of ​​500 to 1,000 square feet,” it said.