India Rental Housing Market By Type (Standalone Spaces, Society Based), By Size of Unit (Up to 400 square feet, 400-800 square feet, above 800 square feet), By Property Type (Fully Furnished, Semi-Furnished, Unfurnished), By Region, Competition Forecast & Opportunities, 2020-2030F

Market Overview

India Rental Housing market was valued at USD 20.31 Billion in 2024 and is expected to reach USD 26.78 Billion by 2030 with a CAGR of 4.56% during the forecast period. 

The rental housing market refers to the segment of the real estate industry that deals with the leasing or renting of residential properties to tenants for a specified period. This market encompasses various property types, including apartments, single-family homes, townhouses, condominiums, and shared housing arrangements. It caters to individuals and families who prefer not to buy a home or are unable to afford homeownership, providing a flexible and often more affordable housing option.  Key stakeholders in the rental housing market include landlords, property management companies, tenants, and real estate agents. Renters benefit from the ability to relocate easily, lower upfront costs compared to purchasing a home, and freedom from property maintenance responsibilities, which are typically handled by the landlord. 

The rental housing market is influenced by factors such as population growth, urbanization, economic conditions, and housing affordability. Demand is particularly high in urban areas and cities with significant employment opportunities, educational institutions, and infrastructure development.

For instance, In FY23, India’s residential property market witnessed with the value of home sales reaching an all-time high of USD 42 billion, marking a robust 48% YoY increase. The volume of sales also exhibited a strong growth trajectory, with a 36% rise to 379,095 units sold.

Key Market Drivers

Affordability and Housing Prices

Affordability is a major factor driving the growth of the rental housing market in India. The rising cost of homeownership, particularly in metropolitan areas, has made it difficult for a large portion of the population to purchase properties. High property prices, escalating construction costs, and rising interest rates on home loans have led many individuals and families to opt for renting instead of buying. In cities like Delhi, Mumbai, and Bengaluru, where real estate prices are among the highest in the country, the dream of homeownership is out of reach for many, especially for middle-income groups and young professionals. For them, renting offers an affordable alternative, as monthly rental payments are often more manageable than the heavy financial commitment required to buy a home. Additionally, fluctuating property prices can make the investment in real estate a risky proposition, especially when markets are uncertain. Renting provides flexibility and less long-term financial burden, allowing tenants to allocate resources elsewhere. Renting also eliminates the cost of maintenance, taxes, and other ownership-related expenses.

As real estate prices continue to rise and the affordability gap widens, the demand for rental properties is expected to increase. This trend is most evident in fast-growing urban centers where high demand for housing outpaces the supply of affordable homes. Consequently, affordability continues to be a key driver of the rental housing market, especially in metropolitan cities.

Government Policies and Initiatives

Government policies and initiatives play a pivotal role in shaping the rental housing market in India. Various measures and schemes introduced by the government have made rental housing more accessible and attractive to both landlords and tenants. These policies often focus on increasing the availability of affordable housing, ensuring better regulation, and providing financial incentives. For instance, the introduction of the Pradhan Mantri Awas Yojana (PMAY) and the Model Tenancy Act have been significant steps toward regulating the rental market. PMAY aims to provide affordable housing for all by 2022, and part of its strategy includes incentivizing developers to build rental homes. The Model Tenancy Act, introduced in 2021, seeks to streamline the rental process by ensuring fair rent agreements, protecting the rights of tenants, and offering dispute resolution mechanisms. This act provides a legal framework that helps boost investor confidence and encourages more people to enter the rental market, knowing that their interests are legally safeguarded. Moreover, the government's emphasis on affordable rental housing projects, including those under the Housing for All initiative, has spurred both private and public sector involvement in the development of rental properties. These measures not only improve the availability of rental units but also foster transparency and reliability in rental transactions, which are essential for the market’s growth.

The creation of rental housing models that suit various segments of society, such as student housing, co-living spaces, and low-income rental units, has further contributed to the dynamism of the rental housing market. As these policies continue to evolve, they are expected to facilitate the growth of rental housing in India.

Changing Lifestyle Preferences

Changing lifestyle preferences among younger generations and urban professionals are significant drivers of the rental housing market in India. The millennial and Gen Z cohorts are showing a marked preference for flexibility, convenience, and mobility, which renting offers over traditional homeownership.

In urban centers, young professionals and students are increasingly opting for rental accommodations, especially as they move to cities for career opportunities or educational pursuits. These individuals tend to prioritize the ability to relocate easily, avoiding long-term financial commitments associated with purchasing property. Renting provides them with the flexibility to explore different cities or job prospects without the burdens of owning a home. Additionally, the growing popularity of co-living spaces reflects a shift toward communal living and shared experiences. Co-living, which is particularly popular among students and working professionals, offers affordable and flexible rental options in prime locations, along with value-added services such as internet, housekeeping, and furniture. The ease of maintenance, networking opportunities, and cost-sharing arrangements make co-living an attractive choice for individuals who seek an affordable and social living arrangement.

These shifts in lifestyle preferences toward rental properties, especially among the younger generation, continue to fuel the demand for rental housing. The growing preference for ready-to-move-in, fully furnished homes, and shorter lease terms also aligns with this trend, making the rental housing market more dynamic and responsive to changing consumer demands.

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Key Market Challenges

Regulatory and Legal Hurdles

One of the primary challenges facing India's rental housing market is the complex and inconsistent regulatory framework that governs rental agreements and tenant-landlord relationships. While laws such as the Rent Control Act were initially designed to protect tenants from exorbitant rents, they have led to unintended consequences, including rental prices that are below market value and a reluctance among landlords to lease out their properties. These outdated laws have created a disincentive for property owners to rent out their spaces, resulting in a significant portion of the housing stock being underutilized. Moreover, the absence of uniform rental regulations across states has further complicated the market. While some states have adapted rental laws to better align with modern market conditions, others continue to follow older, restrictive policies. This lack of consistency and clarity results in confusion for both tenants and landlords, often leading to disputes over rent hikes, maintenance responsibilities, and security deposit returns. In addition, the enforcement of rental laws remains weak, with cases of delayed or non-payment of rent, property damage, and illegal eviction remaining common, leaving both parties vulnerable.

A key issue in this regard is the absence of a centralized, nationwide platform to facilitate rental agreements, dispute resolutions, and tenant screenings. This has contributed to a market where informal agreements are prevalent, which often lack transparency and are susceptible to exploitation. Many tenants are reluctant to enter long-term rental agreements due to the fear of exploitation, while landlords are hesitant to rent to tenants without a formal legal backing, further aggravating the supply-demand imbalance.

To address these challenges, there have been calls for a comprehensive national rental policy, as well as greater standardization in rental contracts, tenant protections, and the establishment of clear dispute resolution mechanisms. While the Model Tenancy Act, introduced in 2021, was a step forward, its implementation remains slow and fragmented, with many states yet to adopt it fully. Until these legal and regulatory challenges are addressed, the rental housing market in India will continue to face inefficiencies and barriers to growth.

Affordability and Supply-Demand Mismatch

Another significant challenge in India's rental housing market is the issue of affordability, which is exacerbated by a persistent supply-demand mismatch. While India has a rapidly growing urban population and an increasing number of migrant workers, the supply of affordable rental housing is severely limited. High property prices, coupled with inflation in construction costs, make it difficult for developers to build rental properties that are affordable for low and middle-income groups. Consequently, rental rates in urban areas, particularly in major cities such as Mumbai, Delhi, Bengaluru, and Chennai, have increased significantly, making it difficult for many people to afford decent accommodation.

The shortage of affordable rental housing is further compounded by a lack of rental properties in key urban centers. Large-scale urbanization has led to a surge in demand for rental homes, but the supply has not kept pace. This imbalance often forces tenants to either accept overcrowded living conditions or rent properties in less desirable, suburban areas far from employment hubs, leading to long commutes and reduced quality of life. Moreover, many property owners prefer to lease their homes to high-income tenants who can afford premium rents, rather than offering properties at lower, more affordable rates.

For low-income groups, this affordability gap is particularly troubling. Migrants, students, and young professionals who move to cities in search of better job prospects are often priced out of the rental market or forced to settle in substandard living conditions. This segment of the population may end up in overcrowded slums or in informal housing arrangements that lack basic amenities, such as sanitation, security, and access to public services. The government has attempted to address these issues through schemes like Pradhan Mantri Awas Yojana (PMAY) and the development of affordable housing projects. However, these efforts have primarily focused on ownership rather than rental housing, leaving the rental sector largely underserved. Additionally, many affordable housing projects are often located on the outskirts of cities, which limits their accessibility for working-class tenants who rely on proximity to urban job markets.

To bridge this affordability gap, there is an urgent need for a structured approach to developing affordable rental housing, as well as policy incentives that encourage landlords to rent to lower-income groups. More investment in low-cost housing, better urban planning, and improved infrastructure in rental housing areas are essential to address the growing demand for affordable living spaces in India's rapidly urbanizing cities.  .

Key Market Trends

Rising Demand for Co-Living Spaces

Co-living spaces are rapidly gaining popularity in India's rental housing market, driven primarily by urbanization, a growing young workforce, and the rising cost of living. Co-living refers to a shared living arrangement where individuals, often young professionals or students, rent a private bedroom within a fully furnished apartment or house while sharing common areas such as kitchens, living rooms, and bathrooms. This trend has been particularly prominent in metropolitan cities like Bengaluru, Mumbai, Delhi, and Pune, where a large influx of young migrants and professionals is common.

The appeal of co-living spaces lies in their affordability, convenience, and community-oriented atmosphere. These spaces offer flexible rental terms, including short-term leases, which cater to transient populations who may not want to commit to long-term contracts. Additionally, co-living spaces come fully furnished with amenities like Wi-Fi, housekeeping, and utility services included in the rent, making them a hassle-free option for renters. The demand for co-living is also being fueled by the rise of startup culture, tech hubs, and educational institutions in urban areas, where the influx of students and working professionals is significant. With the ongoing trend of remote and hybrid working models post-pandemic, co-living spaces provide not only affordable housing but also well-equipped environments for work and social interaction, adding to their appeal. As this trend grows, developers and property management companies are increasingly focusing on creating modern, scalable co-living solutions that cater to the evolving needs of renters, providing them with flexible, convenient, and community-driven living experiences.

Technology Integration and Digitalization in Rental Transactions

Technology is revolutionizing the Indian rental housing market, making the entire rental process—from property search to lease agreements—more efficient, transparent, and accessible. Digital platforms have transformed the way landlords and tenants interact, significantly reducing the friction traditionally associated with renting properties.

Online property rental platforms like NoBroker, Magicbricks, and Housing.com are leading the digitalization trend by offering user-friendly interfaces that enable potential tenants to search for properties, compare prices, and access detailed information about the neighborhoods. These platforms also allow tenants and landlords to negotiate terms and finalize deals without the need for a middleman, reducing brokerage costs. Moreover, technology is enhancing the property management process. Smart homes equipped with IoT devices, including smart locks, lighting systems, and energy-efficient appliances, are increasingly becoming a common feature in rental properties, especially in metropolitan cities. This not only makes the living experience more convenient but also offers enhanced security and reduced maintenance costs.

Another significant technological shift is the growing adoption of electronic rental agreements. Paperless, legally binding contracts are becoming the norm, facilitated by digital signatures and verification platforms. This streamlining of the documentation process ensures quicker lease signings, minimal paperwork, and greater compliance with regulations. Additionally, rental payment apps and digital wallets are simplifying monthly rent payments and automating the rent collection process, benefiting both landlords and tenants. As India’s tech-savvy younger population continues to drive demand, the integration of technology in the rental housing market will continue to grow, leading to improved efficiency, transparency, and a better overall experience for both parties.

Shift Toward Affordable and Flexible Rental Options

The growing trend of affordability and flexibility in the rental housing market reflects broader shifts in India’s socio-economic landscape. With rising property prices and increased migration to urban areas, more individuals are seeking affordable rental options that provide value for money without compromising on essential amenities. This shift is particularly noticeable in cities like Bengaluru, Chennai, Hyderabad, and Mumbai, where there is increasing pressure on rental affordability. In response, landlords and property developers are focusing on offering more budget-friendly rental properties to meet the needs of the working class, students, and young professionals who are price-sensitive. Affordable rental housing options, including shared accommodation and smaller apartments, are becoming more prevalent. Renters are increasingly prioritizing functional, cost-effective living spaces over luxury or larger homes.

Alongside affordability, the demand for flexibility is also on the rise. Renters are seeking more adaptable lease terms, such as shorter-duration contracts and rent-to-own options. This flexibility is particularly appealing to the transient nature of India’s workforce, which often involves relocation for career opportunities or changes in personal circumstances. As a result, many rental agreements now feature shorter lease periods, which cater to the growing number of professionals, students, and expatriates in major cities. Moreover, the trend of furnished rental homes is expanding. Many property owners are offering fully furnished apartments with modern amenities like Wi-Fi, air-conditioning, and household appliances, which appeal to renters seeking hassle-free living arrangements. This convenience is especially attractive to individuals moving into cities from other regions or those who don’t want to invest in furniture or appliances. The rising demand for affordable and flexible rental options is expected to continue, driven by India’s evolving demographics, changing work culture, and shifting housing preferences. This trend will shape the future landscape of the rental housing market, making it more accessible and adaptable to the needs of a diverse and dynamic population.

Segmental Insights

Type Insights

The Standalone Spaces segment held the largest market share in 2023, driven by diverse factors that cater to varied tenant preferences and market demands. Standalone spaces typically include independent houses, villas, and smaller residential units that are not part of larger apartment complexes or gated communities.

One key driver of the standalone spaces segment is the preference for privacy and autonomy among tenants. Many renters, including families and higher-income individuals, favor standalone properties for their exclusivity, larger living spaces, and the freedom to customize their living environment according to personal preferences. This segment appeals particularly to those seeking a detached living experience away from the density and shared amenities of apartment complexes. Additionally, standalone spaces often offer unique features such as private gardens, parking facilities, and more flexible lease terms compared to standardized apartment rentals. These attributes attract a diverse tenant base, including expatriates, senior executives, and individuals with specific lifestyle requirements or preferences.

The market for standalone rental properties is also buoyed by urbanization and evolving demographic trends. As cities expand and suburban areas develop, standalone properties in well-connected neighborhoods become increasingly desirable. Proximity to employment hubs, educational institutions, and essential amenities further enhances the appeal of standalone rentals, driving demand across various demographic segments. Moreover, the standalone segment benefits from a robust resale market, providing landlords with potential capital appreciation opportunities over time. Investors and developers capitalize on this demand by diversifying their portfolios with standalone rental properties, contributing to the segment's sustained growth and market resilience.

Despite its dominance, the standalone spaces segment faces challenges such as regulatory complexities, maintenance responsibilities, and scalability compared to apartment complexes. However, ongoing urbanization, demographic shifts, and evolving consumer preferences continue to bolster the standalone rental housing market's significance and attractiveness within India's dynamic real estate landscape.

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Regional Insights

South India emerged as the dominating region in 2024, South India has emerged as a dominant region in the Indian rental housing market, characterized by robust demand, diverse offerings, and favorable market dynamics. Cities like Bangalore, Chennai, Hyderabad, and Kochi are key contributors to the region's rental housing sector, driven by factors such as rapid urbanization, economic growth, and a burgeoning IT and services industry.

Bangalore, often referred to as India's Silicon Valley, leads the rental market in South India due to its status as a major technology and startup hub. The city attracts a large population of young professionals and expatriates seeking rental accommodations close to employment centers and vibrant urban amenities. This demographic diversity fuels demand for both traditional rental apartments and newer rental formats such as co-living spaces tailored to the preferences of tech-savvy millennials.

Chennai, a major cultural and industrial hub, also plays a significant role in the South Indian rental housing market. The city's thriving manufacturing sector, coupled with its reputation as a center for education and healthcare, attracts a steady influx of migrants and students in need of rental accommodations. Rental options range from affordable housing in suburban areas to upscale apartments in prime locations along the city's coastline.

Hyderabad has emerged as another prominent rental market in South India, driven by its robust IT and pharmaceutical industries. The city's proactive infrastructure development, including metro rail expansion and IT parks, has bolstered its appeal among tech professionals and investors alike. Rental demand is bolstered by a mix of local residents and a growing expatriate community, contributing to a diverse rental housing landscape that includes luxury apartments, gated communities, and affordable housing projects.

Kochi, known for its port activities and tourism industry, has also seen notable growth in its rental housing market. The city's strategic location in Kerala, coupled with infrastructure improvements such as the Kochi Metro, has enhanced its connectivity and livability. Rental properties cater to a mix of local residents, expatriates, and tourists seeking temporary accommodations, with options ranging from waterfront apartments to heritage homes in the city's historic quarters.

Recent Developments

• As of June 2024, Mumbai, India's largest and most expensive property market, has reached a significant milestone with its highest-ever property registrations for the month of June. The city recorded 11,538 property registrations, indicating a notable 12% increase compared to the previous year. This surge in property transactions has also translated into substantial revenue for the state exchequer, with stamp duty collections exceeding Rs 998 crore. This marks a robust 16% year-on-year growth in stamp duty revenue, underscoring Mumbai's resilience and continued attractiveness as a hub for real estate investment despite market fluctuations and economic uncertainties. The uptick in property registrations and revenue highlights confidence among buyers and investors in Mumbai's real estate sector, supported by factors such as infrastructure development, urban amenities, and strategic location advantages that enhance the city's appeal for residential and commercial property investments alike.

 Key Market Players

• NestAway Technologies Pvt Ltd.
• Zolostays Property Solutions Private Limited
• Coliving, Inc.
• Airbnb, Inc.
• Zillow Group   
• OYO Rooms
• Rent Group Inc.
• Booking Holdings Inc.

Report Scope:

In this report, the India Rental Housing Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• India Rental Housing Market, By Type:
• Standalone Spaces
• Society Based  
• India Rental Housing Market, By Size of Unit:
• Up to 400 square feet
• 400-800 square feet
• Above 800 square feet  

• India Rental Housing Market, By Product Type:
• Fully Furnished
• Semi-Furnished
• Unfurnished
• India Rental Housing Market, By Region:
• South India
• West India 
• North India 
• East India

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the India Rental Housing Market.

Available Customizations:

India Rental Housing Market report with the given market data, Tech Sci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).

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