The Rental yield in India has been historically lowest amongst comparable economies making investment in residential units less attractive. While the trend seems to be reversing in some locations, lets have a look at what drives the rental demand.
Jobs - The rental market in Sarjapur, Bellandur, Outer Ring Road belt of Bangalore shot up multiple times as new tech parks came in that area. Jobs continue to fuel the demand in any cluster and have a direct co-relation to rental values as well
Prices to buy - If the property prices sour high significantly, people start to look for alternative options to stay in & around that area taking the rental prices up.
Socio-cultural development - Hospitals, Malls, Cinemas, Shopping Complexes, Schools etc play a role in driving habitation and thereby demand of tenancy.
Rental prices - Another trend that's been observed is that as the rental values start to go up, the nearby areas start becoming more and more attractive for people to rent out.