1BHK vs 2BHK vs 3BHK: Which Performs Best in Kerala’s Rental Market?

Kerala’s rental market is evolving rapidly, shaped by urbanisation, NRI investments, and changing lifestyle preferences. If you’re considering investing in a 1BHK, 2BHK, or 3BHK apartment, understanding which configuration performs best is crucial for maximising rental returns and occupancy.

Kerala Rental Market Overview

Urbanisation and NRI Influence: Cities like Kochi, Trivandrum, and Calicut are seeing a surge in demand for quality rental housing, driven by IT growth, infrastructure upgrades, and a steady influx of NRIs and professionals.

Tourism and Short-Term Rentals: Kerala’s popularity as a tourist destination has boosted demand for serviced apartments and vacation rentals, especially in urban and scenic locations.

Performance Comparison: 1BHK, 2BHK, and 3BHK

1BHK Apartments

Pros:

• Lower entry cost and maintenance.
  

• High demand among singles, young professionals, and couples.
  

• Dominant in the short-term rental (Airbnb) market, making up about 33.7% of listings in Ernakulam.
  
  

Cons:

• Limited appeal for families or long-term tenants.
  

• Lower rental yield compared to larger units in prime areas.
  

• Appreciation and resale value tend to lag behind larger units.
  
  

Typical Rents: In prime areas like Ernakulam, 1BHK flats can command rents up to ₹30,000/month if fully furnished and well-located.

2BHK Apartments

Pros:

• Most popular choice for small families, working couples, and long-term tenants.
  

• Balance between affordability and space.
  

• Strong rental demand in both metro and tier-2 cities.
  

• Easier to rent out and resell compared to 1BHKs.
  
  

Cons:

• Slightly higher maintenance and purchase cost than 1BHK.
  

• May face competition from both 1BHK (for singles) and 3BHK (for larger families).
  
  

Typical Rents: In Kochi, 2BHK apartments rent for ₹20,000–₹35,000/month depending on location, furnishing, and amenities.

3BHK Apartments

Pros:

• Preferred by larger families, NRIs, and groups seeking more space.
  

• Higher rental yields and appreciation potential in premium locations.
  

• Increasingly in demand post-pandemic due to the need for home offices and extra space.
  
  

Cons:

• Higher purchase and maintenance costs.
  

• May have longer vacancy periods if not in prime locations or if priced too high.
  

Typical Rents: 3BHK apartments in top localities can fetch ₹25,000–₹40,000/month, especially if fully furnished and with premium amenities.

Rental Yield and Occupancy Trends

Short-Term Rentals: 1BHKs and 3BHKs dominate the Airbnb market, catering to solo travellers and large groups, respectively.

Long-Term Rentals: 2BHKs are the most sought-after for year-long leases, offering the best balance of rentability and price.

Investment Insights

• 2BHKs are generally the safest bet for consistent rental income and low vacancy, especially in urban centers and IT hubs.
  

• 3BHKs offer the highest rental yields and appreciation in premium locations, but require higher upfront investment and may face longer vacancies if not targeted to the right segment.
  

• 1BHKs are ideal for investors focused on short-term rentals or targeting singles and couples, but may not offer the best long-term appreciation.

Which Performs Best?

• For steady, long-term rental income: 2BHK apartments perform best, balancing affordability, demand, and ease of management.

• For high rental yield in premium or tourist-heavy areas: 3BHKs can outperform, especially for luxury or group rentals.

• For short-term, high-occupancy rentals: 1BHKs are strong performers, particularly in city centers and near business hubs.

Ready to invest in Kerala’s booming rental market? Thithithara can help you choose the right property and secure higher rental yields. Start your journey with Thithithara today and make your rental property work harder for you.