Housing Rentals Surge in Major Indian Metros: Bengaluru and Pune Lead the Way
India's real estate market is experiencing a significant boom, with rental prices in key metropolitan cities like Bengaluru and Pune seeing substantial increases. This surge is driven by a growing demand for homes and a rebalancing of demand in innovation-driven urban clusters.
Real EstateRental MarketBengaluruPuneNoidaReal Estate PuneMay 26, 2025
According to data from Magicbricks, a digital property search platform, average rentals in major metro cities saw a sharp increase of 10 percent between January and March 2025, even as tourist hotspots such as hill stations continue to see a surge in demand.
Data showed that Bengaluru (15.7 percent) and Pune (12.5 percent) recorded the steepest quarterly rental hikes, while rental growth in Noida was 7.9 percent in Q1 2025. Vishal Raheja, Founder and MD, InvestoXpert, said that India’s rental market is undergoing a structural transformation and the rental hikes, particularly in Bengaluru and Pune, point to more than just post-pandemic recovery.
“They reflect a fundamental rebalancing of demand across innovation-driven urban clusters, where rapid job creation in tech, R&D, and start-ups is outpacing housing supply. Bengaluru’s surge, for instance, is closely tied to the return of talent and hybrid work models that demand proximity to core tech zones without full-time office constraints,” he said.
Mumbai’s rental market saw an appreciation of 10.2 percent, while Delhi witnessed an uptick of 7.3 percent. The Kolkata housing market saw a 10.2 percent growth in property rentals between January and March 2025, while Chennai saw an appreciation of 5.6 percent in housing rentals. The Hyderabad residential market witnessed only 4.8 percent growth in rentals during the same period, data showed.
However, micro-markets of Greater Noida and Gurugram in the NCR witnessed a moderate 3.2 percent and 4.1 percent rental appreciation, respectively, reflecting early signs of demand stabilization. The data further showed that among premium rental markets, 43 percent of rental demand in Mumbai, 37 percent in Gurugram, and 26 percent in Bengaluru was concentrated in the Rs 50,000–Rs 1,00,000 per month budget bracket.
Meanwhile, metros such as Ahmedabad (49 percent), Pune (38 percent), and Navi Mumbai (32 percent) saw demand largely dominated by a more affordable Rs 20,000–Rs 30,000 per month range. In Greater Noida, despite increasing rents, affordability remained a key driver, with 86 percent of the rental demand focused on properties available for Rs 10,000 to Rs 20,000 per month, the data showed.
The Rent Index report of Magicbricks also highlighted a steady improvement in gross rental yields across most cities, making rental investments more attractive. Ahmedabad emerged as the leader, with gross rental yield rising from 3.6 percent YoY in Q1 2024 to 4.2 percent in Q1 2025. Similar upward trends were observed in Bengaluru (from 3.6 percent to 3.8 percent), Hyderabad (from 3.4 percent to 3.7 percent), and Mumbai (from 3.8 percent to 3.9 percent) over the same period.
Raheja added that this surge also highlights a growing imbalance between demand and available supply, particularly in mid-to-premium rental segments. The current momentum underscores the urgency for developers and urban planners to expand rental housing infrastructure while ensuring the rental ecosystem remains inclusive and future-ready.
Sunil Sisodiya, Founder and Chairman, Neworld Developers, said that as rental markets in metros heat up, a clear spill-over effect will be witnessed into nearby Tier 2 and 3 regions. He said that with affordability and inventory tightening in core urban zones, people are increasingly exploring well-connected satellite towns.
“For instance, in NCR, this includes emerging hotspots like Meerut, Sonipat, and Bahadurgarh, while Bengaluru’s overflow is benefiting areas like Tumakuru and Hosur. These micro-markets offer a more balanced cost-value equation and are becoming attractive to remote and hybrid workers. Developers and planners must now view these regions as the next frontier for sustainable rental growth,” he said.
Frequently Asked Questions
What is the main reason for the surge in rental prices in major Indian metros?
The main reason for the surge in rental prices in major Indian metros is the rapid job creation in tech, R&D, and start-ups, which is outpacing housing supply. This is particularly evident in cities like Bengaluru and Pune.
Which cities saw the highest rental hikes in Q1 2025?
Bengaluru and Pune saw the highest rental hikes in Q1 2025, with increases of 15.7 percent and 12.5 percent, respectively.
How has the rental market in Noida performed compared to other metros?
Noida saw a rental growth of 7.9 percent in Q1 2025, which is moderate compared to the steeper increases in cities like Bengaluru and Pune.
What is the impact of hybrid work models on rental demand in major cities?
Hybrid work models are driving rental demand in major cities, as they allow people to live closer to tech zones without the need for full-time office attendance, particularly in cities like Bengaluru.
What are the emerging hotspots for rental demand in the NCR region?
Emerging hotspots for rental demand in the NCR region include Meerut, Sonipat, and Bahadurgarh, which are becoming attractive due to their cost-value equation and connectivity to core urban zones.
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