Rental rates surge 30% in India, Rs 10,000-20,000 homes top demand in 2025

If you're a tenant, expect higher rents in metros, particularly for compact homes. If you're an investor, cities like Ahmedabad, Navi Mumbai, and Hyderabad offer solid rental yields.

India’s rental housing market witnessed robust growth in the second quarter of 2025, with rental rates surging 4.8% quarter-on-quarter (QoQ) and 29.6% year-on-year (YoY), according to Magicbricks’ latest Rental Index Report. The sector also recorded a 3% QoQ increase in both demand and supply, driven by declining youth unemployment—from 17.8% in 2018 to 10.2% in 2024—and high property prices that are nudging urban dwellers towards rental housing. 

In Q2 2025, Greater Noida led rental demand growth with a sharp 20.7% quarter-on-quarter (QoQ) increase, followed by Delhi at 17.2% and Ahmedabad at 12.2%, signaling a strong shift from ownership to occupancy.  On the supply side, Greater Noida again topped the charts with a 12.6% QoQ increase, trailed by Chennai at 11.4%. Year-on-year (YoY), rental supply surged in Mumbai (+23.4%), Navi Mumbai (+22.7%), and Noida (+22.3%), reflecting growing investor interest and faster project completions.  Meanwhile, rental prices climbed significantly across several cities, with Navi Mumbai recording a +19.4% YoY increase, Kolkata at +13.7%, Hyderabad at +11.5%, and Chennai at +11.2%. 

There has been a significant rise in demand for compact 1 BHK homes, particularly in Navi Mumbai (up 27% quarter-on-quarter), Gurugram (23%), Pune (19%), and Noida (18%). In contrast, demand for larger 3 BHK homes dropped sharply in Gurugram (-25%), Delhi (-24%), Ahmedabad (-21%), and Noida (-21%), indicating a strong downsizing trend, especially in the Delhi-NCR region. 

 

 

Nationally, 2 BHK units remain the most preferred, accounting for 46% of overall demand. Semi-furnished homes continue to dominate the rental market, making up 52% of demand and 53% of supply.

 

Most tenant interest was focused on homes between 500 and 1,500 sq. ft., which drew 76% of attention. In terms of affordability, the ₹10,000–₹20,000 monthly rent bracket attracted the most demand, making up 36% of the national share

 

Key Highlights:

• Demand and Supply: Up 3% quarter-on-quarter (QoQ) each
• Rental Prices: Up 4.8% QoQ and 29.6% year-on-year (YoY)

 

Top Performers (Rental Demand QoQ):

 

Greater Noida (+20.7%)

 

Delhi (+17.2%)

 

Ahmedabad (+12.2%)

 

Rental Supply Growth (QoQ):

 

Greater Noida (+12.6%)

 

Chennai (+11.4%)

 

YoY Spike in Listings:

 

Mumbai (+23.4%)

 

Navi Mumbai (+22.7%)

 

Noida (+22.3%)

 

Highest Rental Yield: 4.1% in Ahmedabad, Chennai, Hyderabad, and Navi Mumbai

 

“This is more than just market momentum. India is seeing a cultural shift where tenants, especially young professionals, are prioritizing flexibility, affordability, and lifestyle,” said Sudhir Pai, CEO of Magicbricks.

 

Small is the New Big

The market is tilting heavily in favour of compact homes. 

 

Demand for 1 BHK units surged—Navi Mumbai led with a 27% QoQ jump, followed by Gurugram (23%), Pune (19%), and Noida (18%). This coincides with a sharp drop in demand for 3 BHKs, particularly in Delhi-NCR and Ahmedabad, indicating a strong downsizing trend.

 

2 BHKs remained the most popular, accounting for 46% of total demand.

 

Furnishing Preferences & Budget Trends

Semi-furnished homes led the market, with 52% of demand and 53% of supply.

 

Homes sized 500–1,500 sq. ft. accounted for a whopping 76% of tenant interest.

 

The sweet spot for monthly rent remained in the ₹10,000–₹20,000 bracket, which drew 36% of overall demand.

 

Mumbai continued to top the charts as India’s most expensive rental market, while Greater Noida, Ahmedabad, and Noida emerged as budget-friendly hotspots.

 

Rising investor activity, faster project completions, and higher rental yields are pushing rentals into the spotlight. The highest gross rental yield of 4.1% in cities like Ahmedabad and Navi Mumbai makes rental real estate a compelling asset class.Magicbricks believes the trend of rising rents may moderate in the medium term as supply catches up. However, the deeper structural shift—driven by urban migration, lifestyle changes, and flexible work culture—is expected to sustain long-term demand in the rental market.