Rent or buy? Top markets where rental growth has outpaced capital growth

As more Indians migrate to urban centers, the debate between buying and renting homes has once again resurfaced. While both options have their merits, recent data from property consulting firm Anarock shows a significant trend in rental value appreciation outpacing capital value growth in several key markets.

ANAROCK Research analyzed data from the top 7 cities and found that rental values in specific micro-markets increased by up to 72% between late 2021 and the first half of 2024. This surge in rental values highlights the growing demand for rental properties in these areas.

Key Findings:

Bengaluru’s Sarjapur Road saw average monthly rental values increase by 67%, while capital values increased by 54%. At Thannisandra Main Road, avg. rental values rose 56% while capital values appreciated 52%.

 

Pune’s Hinjewadi saw rental values appreciate by 52%, while capital values rose just 31%. In Wagholi, rental values growth was 60% while capital values rose by just 30%.

In Kolkata’s EM Bypass, rental value appreciation was 46%, while capital values growth was just 15%. In Rajarhat, rental value growth was 30% while capital appreciation was 23%.

Chennai’s Pallavaram recorded rental value growth of 40%, while capital values rose by 18%. At Perambur, rental value growth was 33% while capital appreciation was 18%.

Rental growth: 

 

Average Monthly Rental Growth

Top markets where capital value appreciation outpaced rental value appreciation - 2021- end to H1 2024-end

Key micro-markets in NCR, MMR and Hyderabad witnessed this trend. For instance:

NCR’s Sohna Road saw rental values rise 40% in the period, while capital values jumped by 54%. Likewise, Sector-150 in Noida saw rental value growth of 56%, while capital values appreciated by a whopping 126%.

In MMR’s Chembur, rental growth was 38% while capital appreciation stood at 39%. In Mulund, rental values appreciated by 26% while capital prices rose 36%.

Hyderabad’s HITECH City and Gachibowli also saw capital appreciation outpace rental values. In HITECH City, rental value growth was 46% and capital appreciation was 59%, while Gachibowli saw rental values rise 50% and capital values by 70 per cent.

Avg. Capital Values

Source: Anarock

"Data analysis of key micro-markets in the top 7 cities shows that in cities like Bengaluru, Pune, Kolkata and Chennai, average residential rental values rose more than the capital values between 2021-end to H1 2024. However, areas in NCR, MMR and Hyderabad saw the reverse trend – capital values appreciated more than the rental values. Such data can be a key parameter - though by no means the only one - used to determine whether it is more advantageous to buy a property or opt for renting," said Dr. Prashant Thakur, Regional Director & Head, Research - ANAROCK Group.

 Not every individual who migrates to a certain city for job opportunities intends to put down permanent roots there. Others may be drawn to the city's urban ethos and decide to make it their home, while yet others may perceive value in investing in a property there regardless of whether they will settle down there or not.

Other factors that drive such a decision are financial wherewithal, job growth prospects, stage of life, size of family, and personal preferences.