In 2024, real estate investors face a complex landscape with varied opportunities across India’s major cities. A recent analysis reveals that Chennai, Ahmedabad, and Kolkata are currently the most affordable markets, offering the lowest price-to-income (P/I) ratios among the top ten property markets in India. Conversely, Mumbai and Delhi rank as the least affordable due to significantly higher property prices relative to household incomes.
From 2020 to 2024, property prices in these major urban centres have experienced a compound annual growth rate (CAGR) of 9.3%, while household incomes have lagged with a 5.4% increase. This growing disparity has escalated the average P/I ratio from 6.6 in 2020 to 7.5 in 2024, surpassing the globally accepted benchmark of 5.0. Chennai, Ahmedabad, and Kolkata, however, have maintained a more manageable P/I ratio of 5.0, making them more accessible for investment. In contrast, Mumbai’s and Delhi’s P/I ratios have surged to 14.3 and 10.1, respectively, reflecting higher cost pressures.
Additionally, the burden of mortgage payments has intensified, with the EMI-to-monthly income ratio rising from 46% in 2020 to 61% in 2024. Mumbai leads with an exorbitant EMI-to-income ratio of 116%, followed by Delhi and Hyderabad at 82% and 61%, respectively. On the other hand, Ahmedabad, Chennai, and Kolkata exhibit lower ratios, remaining under 50%, and thus are deemed more financially viable for homebuyers.
Bengaluru, often dubbed India’s Silicon Valley, has emerged as a standout performer in terms of rental yields. As of Q1 2024, the city offers a rental return of 4.45%, a substantial rise from 3.6% pre-pandemic. This increase is attributed to the robust IT sector and the resurgence of office work, which has amplified rental demand, particularly in localities like Sarjapur Road and Whitefield. These areas saw an 8% increase in average rents for 2 BHK apartments between Q4 2023 and Q1 2024. The trend of rising rental yields extends to other cities as well. Mumbai and Gurugram have also witnessed notable increases, with rental yields climbing to 4.15% and 4.1%, respectively. Across the country, rents surged by over 30% in 2023, continuing their ascent into 2024. Bengaluru led with some localities seeing rent hikes of over 40%, with Sarjapur Road and Whitefield experiencing significant increases in monthly rents. Meanwhile, cities like Noida, Delhi, and Mumbai have also seen notable rent rises, albeit at a slower pace.
