Real Estate Update: Home Prices Rising Faster Than Rental Yields

Capital value appreciation in major Indian real estate markets has outpaced rental growth, with key locations seeing property prices rise significantly faster than rental yields, according to the latest data from ANAROCK.

Noida’s Sector-150 recorded a 128 per cent increase in capital values between the end of 2021 and 2024, while rental prices for a standard 1,000 sq. ft. 2BHK unit rose by 66 per cent. Similar trends were observed in Hyderabad, the National Capital Region (NCR), and the Mumbai Metropolitan Region (MMR), where property values saw a sharper rise than rental values over the same period.

In Bengaluru, Thanisandra Main Road saw capital values appreciate by 67 per cent, exceeding the 62 per cent rise in rental values. Meanwhile, Sarjapur Road recorded rental growth of 76 per cent, outpacing capital appreciation of 63 per cent.

NCR’s Sohna Road reported a 59 per cent rise in property prices, while rental values climbed 47 per cent. Noida’s Sector-150 led the market in capital appreciation, with a 128 per cent increase, while rental growth remained lower at 66 per cent.

In Hyderabad’s HITECH City and Gachibowli, capital values grew at 62 per cent and 78 per cent, respectively, while rental values increased by 54 per cent and 62 per cent.

Mumbai’s Chembur and Mulund saw capital appreciation at 48 per cent and 43 per cent, respectively, exceeding rental growth rates of 42 per cent and 29 per cent.

While capital appreciation dominated in several major cities, select markets in Pune, Kolkata, and Chennai experienced higher rental value growth compared to property price increases.

In Pune, Hinjewadi saw rental values rise by 57 per cent, while capital values increased by 37 per cent. Wagholi recorded a 65 per cent surge in rentals against a 37 per cent increase in property values.

Kolkata’s EM Bypass saw rental appreciation of 51 per cent, while capital values grew by just 19 per cent. Rajarhat’s rental values climbed 37 per cent, while property prices increased by 32 per cent.

In Chennai, rental values in Pallavaram grew by 44 per cent, surpassing the 21 per cent rise in capital appreciation. Perambur recorded a rental growth of 36 per cent against a 23 per cent increase in property prices.

The contrasting trends between capital appreciation and rental growth highlight the evolving dynamics of the Indian real estate market. For investors, areas with rapid property price appreciation, such as Noida, Hyderabad, and MMR, present long-term return potential. In contrast, localities with stronger rental growth, such as Pune, Kolkata, and Chennai, offer opportunities for steady rental yields.

“Investors need to align their strategies based on location-specific trends,” said Anuj Puri, Chairman of ANAROCK Group. “For long-term capital appreciation, markets with high property value growth are ideal, whereas rental-focused investors should consider areas where rental rates are rising steadily. Homebuyers must evaluate price trends against rental growth to determine whether renting or purchasing is the better financial decision in a given market.”