Ahmedabad Shines with Top Rental Yields in India
Ahmedabad leads the pack with the highest rental yields in India, clocking in at 3.9%, according to a recent report by Magicbricks. Other cities like Hyderabad, Kolkata, and Pune are also seeing significant increases in rental returns.
Rental YieldsReal EstateAhmedabadProperty InvestmentMagicbricksReal Estate PuneNov 27, 2024
This impressive rental yield in Ahmedabad is driven by strong demand and relatively affordable property prices compared to other major cities. The city’s rental market witnessed a significant 7.9% increase in rents during the quarter. For instance, average rents for a 2BHK apartment have risen to Rs 21,100 in areas like Shela and Rs 23,200 in South Bopal. The average price of properties in Ahmedabad is Rs 5,927 per square foot, and the average monthly rent has increased by 16.9% year-on-year, reaching Rs 19.35 per square foot.
Despite the rise in rents, Ahmedabad remains a highly attractive market for rental investors, particularly in prime localities such as Satellite and Prahlad Nagar. Rents for a 3BHK apartment in Satellite have surged to Rs 42,500, while in Prahlad Nagar, they have reached Rs 40,000. This steady rise in rental income potential is making Ahmedabad a preferred destination for property investors.
Market dynamics in Ahmedabad show a solid growth trajectory, with demand increasing by 18.07% year-on-year across various localities, while supply has decreased by 5.8% year-on-year. This supply-demand imbalance is further boosting rental yields.
Other cities are also experiencing notable rental yield increases. Chennai saw a 21.3% increase in rental yields from quarter to quarter, while Delhi witnessed a more modest but significant 8.8% rise. Hyderabad’s rental yield increased from 3.5% in Q2 2024 to 3.7% in Q3 2024. The city saw a 28.2% increase in average monthly rents to Rs 25.17 per square foot, while property prices rose by only 6.2% year-on-year to Rs 8,188 per square foot. Kolkata, with a rental yield of 3.7%, has seen a steady rise in property prices and average rents, increasing by 12.9% year-on-year to Rs 22.14 per square foot.
Prasun Kumar, Chief Marketing Officer of Magicbricks, commented, 'For decades, homebuyers primarily sought properties for personal use or as a primary residence. 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.'
Cities like Hyderabad, Ahmedabad, Pune, and Kolkata are leading the way with significant increases in rental rates, outpacing established hubs such as Bengaluru and Delhi. Both Hyderabad and Kolkata stand out due to their influx of tenants, driven by burgeoning employment opportunities and cost-effective lifestyles.
For investors, the current market conditions present a golden opportunity to capitalize on rental income and property appreciation. With demand remaining robust across major urban centers, these high-performing cities offer lucrative prospects for long-term gains, according to the Magicbricks report.
The 'Housing Affordability in Major Indian Cities' report by Magicbricks also revealed that the property price to Annual Household Income Ratio (P/I Ratio) in India has increased from 6.6 in 2020 to 7.5 in 2024, higher than the globally accepted benchmarks of 5. Based on the P/I Ratio, Chennai (5), Ahmedabad (5), and Kolkata (5) are among the most affordable cities for residential investments in 2024, while the Mumbai Metropolitan Region (14.3) and Delhi (10.1) are the least affordable.
The report also noted that the EMI-to-monthly income ratio in India has risen from 46% in 2020 to 61% in 2024, indicating a growing burden of EMIs on home buyers and reflecting affordability concerns nationwide, especially in metros. The trend is more pronounced in MMR (116%), New Delhi (82%), Gurugram (61%), and Hyderabad (61%). In contrast, cities like Ahmedabad (41%), Chennai (41%), and Kolkata (47%) are relatively more affordable for home buyers.
Frequently Asked Questions
What is the highest rental yield in India according to the Magicbricks report?
According to the Magicbricks report, Ahmedabad has the highest rental yield in India, clocking in at 3.9%.
Which cities are seeing significant increases in rental yields?
Cities like Ahmedabad, Hyderabad, Kolkata, and Pune are seeing significant increases in rental yields, outpacing traditional hubs like Bengaluru and Delhi.
What factors are driving the high rental yields in Ahmedabad?
The high rental yields in Ahmedabad are driven by strong demand and relatively affordable property prices compared to other major cities, as well as a significant increase in rents and a decrease in supply.
How has the property price to Annual Household Income Ratio (P/I Ratio) changed in India?
The P/I Ratio in India has increased from 6.6 in 2020 to 7.5 in 2024, higher than the globally accepted benchmarks of 5.
Which cities are the most affordable for residential investments in 2024?
Chennai, Ahmedabad, and Kolkata are among the most affordable cities for residential investments in 2024 based on the P/I Ratio.
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