Residential property rentals rose 10-25 per cent in Delhi in the January-March quarter of 2004, the biggest surge witnessed by the segment in the country.

According to real estate consulting firms, rentals in the commercial area rose around 20-25 per cent in the national capital region, which includes Delhi, Gurgaon and other adjacent areas.

Rentals in Mumbai's residential areas have risen 5-10 per cent during the quarter, while commercial rentals remained stable. Certain suburban areas such as Malad and Powai have seen the highest rise in rentals.

Anuj Puri, managing director at property consultants Chesterton Meghraj, said, "Commercial rentals in the national capital region continues to be driven by malls and business outsourcing process units."

Real estate services firm Cushman and Wakefield, in its latest market report, said, "Rental variation stood in the range of 10-25 per cent for the capital's prime and grade A residential properties during the January-March quarter as against the same period last year."

The rise in capital values compared with the peak value of 1997 for posh south Delhi colonies like Vasant Vihar, Golf Links and Westend coupled with a fairly decent rental yields have lured a lot of small investors into buying properties in these areas.

However, rentals for prime and residential properties in Gurgaon registered an impressive 35 per cent rise.

Puri said, "The satellite cities Gurgaon and Noida would continue to offer quality residential developments. Gurgaon is expected to have an edge over Noida due to the presence of large developers such as DLF and Unitech."

C&W predicted that large quantum of new constructions in Gurgaon and Noida will support the increased demand from users in the mid-budget segment.

The demand for condominium-style housing in the suburban locations, which offers cost efficiency and good residential infrastructure, would increase in 2004.

The real estate market in southern cities such as Bangalore and Hyderabad continues to be driven by the demand generated from the technology sectors such as telecom, information technology and allied services, and business process outsourcing.

In Bangalore, where vacancy levels had dropped last year due to an upsurge in market activity, is appearing stable now and the rental and capital values across the micro markets may strengthen in the coming months, according to real estate consultants.