Mumbai: India’s rental housing market entered a phase of recalibration during the October–December 2025 quarter, marked by a widening gap between capital value growth and rental appreciation, according to the latest Magicbricks Rental Index (OND’25). While property prices continued to rise at a faster pace (2.2 %) pan-India rental demand declined by 2.4% quarter-on-quarter even as rents increased by 2.2%, indicating a market adjusting to yield compression rather than a broad-based slowdown, with pricing resilience sustained in preferred micro-markets.

A key structural takeaway from the report is the sustained outpacing of rental growth by capital value appreciation across cities, resulting in visible yield compression. Chennai emerged as the top market in terms of gross rental yields at 4.16%, followed by Ahmedabad at 3.98% and Hyderabad at 3.93%. Bengaluru and Kolkata reported similar yield levels at 3.88% each. The relatively narrow spread in yields across major cities underscores a maturing rental market, where returns are increasingly shaped by capital appreciation rather than rental upside alone.

Further, tenant preference during the quarter remained firmly tilted towards mid-sized homes. Units ranging between 500 and 1,500 sq ft accounted for nearly 78% of rental demand, highlighting a clear inclination towards efficient layouts that balance affordability with livability. Semi-furnished homes continued to dominate both demand and supply, accounting for 54% of tenant demand and 55% of available listings, effectively emerging as the standard rental format across major cities.

Commenting on the findings, Prasun Kumar, CMO, Magicbricks, said, “The data indicates that India’s rental market is not slowing, but recalibrating. While demand has moderated sequentially, rental values continue to show resilience in micro-markets where supply is constrained. The growing divergence between capital values and rental growth reflects a maturing market, where investor focus is gradually shifting from yield-led returns to long-term capital appreciation, while tenants remain highly selective about configuration, size, and affordability.”

The index also highlights a growing demand–supply gap at the affordable end of the rental spectrum. While demand remains concentrated in lower and mid-rent categories, a significant share of listings continues to be positioned in higher ticket sizes, limiting choice for value-seeking tenants and intensifying competition for appropriately priced homes.

Overall, the Magicbricks Rental Index OND’25 suggests that India’s rental housing market is entering a more balanced and discerning phase, shaped by micro-market performance, configuration suitability, and the evolving relationship between capital values and rental income.