North Bengaluru is a good neighborhood with a greater rental return than the eastern IT corridor

 North Bengaluru is a good neighborhood with a greater rental return than the eastern IT corridor

Because of their closeness to the main IT parks, Sarjapur Road and Whitefield in the east have an advantage over North Bengaluru in terms of rental growth.

According to local brokers, North Bengaluru's relatively young and rapidly expanding real estate market is the primary factor driving higher rental yields in the region.

Based on ANAROCK statistics, North Bengaluru has surpassed Whitefield's eastern IT corridor and top regions in terms of rental yield.

According to the report, the rental yield in North Bengaluru increased from 3.38 percent four years before to 4.48 percent in the third quarter of this year. The revenue a leased property generates in relation to its purchase price is referred to as its rental yield.

"The rental return in Whitefield is now 4.41 percent; in 2019, it was just 3.7 percent. According to Ashish Sharma, city head of ANAROCK Group's Bengaluru office, Moneycontrol notes that Thannisandra Main Road in the north is interestingly more expensive to rent. The rental return is lower in desirable neighborhoods like Indiranagar and Koramangala, where there is a mix of demand from the IT and other industries (3.37% and 3.37%).

Sharma explained the decline in rental yield in the top locations by pointing out that while there is less of a difference in rents, capital values in these two places are still relatively greater than in the well-known IT clusters.

According to local brokers, North Bengaluru's relatively young and rapidly expanding real estate market is the primary factor driving higher rental yields in the region. Additionally, they said that some regions' real estate values have been damaged by infrastructure failures along the eastern IT corridor, such as significant traffic jams and waterlogging.

Project prices in certain eastern regions that experience frequent flooding have either stagnated or increased slowly, according to Kiran Kumar, vice president of Hanu Reddy Realty.

rise in rentals

In the east, rents are rising more quickly, however. According to ANAROCK, the average 1,000 square foot two-bedroom apartment rental in Whitefield increased by 31% and 27%, respectively, during the first nine months of 2023.

"If we are to look at the price of renting growth at Thannisandra Main Road, it remains at 16 percent in the last nine months between Rs 24,500 per month in 2022-end to approximately Rs 28,500 per month in September-2023 end," Sharma said.

Due to their advantageous locations near the city's main IT parks—Electronic City to the south, Whitefield, and the IT-belt around the Outer Ring Road—Sarjapur Road and Whitefield have an advantage over North Bengaluru in terms of rental growth.

Demand is still strong since many people choose to reside in and near these IT hubs. Since there is often a mismatch between supply and demand in many cultures, this high demand basically translates into higher rental rates, according to Sharma.

In a desirable area, the monthly rent for a two-bedroom apartment close to Whitefield's eastern IT corridor might reach Rs 40,000–50,000, while a three-bedroom apartment may cost between Rs 60,000 and Rs 70,000.

Most east coast developments have seen a 30–40% increase in rental values, while in certain gated communities, rents have increased by up to 50%.