Rental Housing Market Booms in Metro Cities: Bengaluru, Pune Lead the Surge
Rental prices in major metro cities, particularly Bengaluru and Pune, have surged by up to 15.7% in Q1 2025, driven by strong demand and limited supply in tech-driven urban areas.
Rental MarketReal EstateMetro CitiesBengaluruPuneReal Estate NewsMay 26, 2025
According to data from Magicbricks, a leading digital property search platform, average rental prices in major metro cities saw a sharp increase of 10 percent between January and March 2025. This trend is particularly notable in tourist hotspots such as hill stations, which continue to see a surge in demand.
Bengaluru and Pune recorded the steepest quarterly rental hikes, with Bengaluru experiencing a 15.7 percent increase and Pune seeing a 12.5 percent rise in Q1 2025. Noida also saw a notable rental growth of 7.9 percent during the same period.
Vishal Raheja, Founder and MD of InvestoXpert, noted that India’s rental market is undergoing a significant structural transformation. The rental hikes, especially in Bengaluru and Pune, indicate more than just a post-pandemic recovery. “These increases 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. For instance, Bengaluru’s surge 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 explained.
Mumbai’s rental market saw an appreciation of 10.2 percent, while Delhi witnessed an uptick of 7.3 percent. The Kolkata housing market experienced a 10.2 percent growth in property rentals between January and March 2025, and Chennai saw an appreciation of 5.6 percent in housing rentals. The Hyderabad residential market witnessed a more moderate 4.8 percent growth in rentals during the same period, according to the data.
However, micro-markets of Greater Noida and Gurugram in the National Capital Region (NCR) saw a moderate 3.2 percent and 4.1 percent rental appreciation, respectively, reflecting early signs of demand stabilization.
The data further highlighted 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 Rent Index report from Magicbricks also noted 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 of Neworld Developers, observed that as rental markets in metros heat up, a clear spill-over effect will be seen in nearby Tier 2 and 3 regions. “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 primary reason for the surge in rental prices in metro cities?
The primary reason for the surge in rental prices in metro cities is the rapid job creation in tech, R&D, and start-ups, which is outpacing the available housing supply.
Which cities saw the steepest rental hikes in Q1 2025?
Bengaluru and Pune saw the steepest rental hikes in Q1 2025, with increases of 15.7 percent and 12.5 percent, respectively.
What is the current trend in gross rental yields across major cities?
There is a steady improvement in gross rental yields across most cities, making rental investments more attractive. For example, Ahmedabad's gross rental yield rose from 3.6 percent in Q1 2024 to 4.2 percent in Q1 2025.
How are micro-markets in the NCR and other metro areas performing?
Micro-markets in the NCR, such as Greater Noida and Gurugram, saw moderate rental appreciation of 3.2 percent and 4.1 percent, respectively, reflecting early signs of demand stabilization.
What is the expected impact on nearby Tier 2 and 3 regions due to the rental market boom in metros?
As rental markets in metros heat up, there is a clear spill-over effect into nearby Tier 2 and 3 regions. People are increasingly exploring well-connected satellite towns, which are becoming attractive to remote and hybrid workers.
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