With urban populations in India growing at an unabated pace and housing demand rising continually, rental yields in cities across India are of interest to investors and owners. Whether you are a legitimate investor in property or a beginner, understanding the potential for rental income in cities where you make a property investment could determine the outcome of your investment decision. At Reeltor, we are in the business of making property decisions easy – with insights, data, and evidence-based advice to help you succeed in fluctuating rental markets in India.
What is rental yield?
Rental yield is a key metric that measures annual rental income against a property’s market value, expressed as a percentage. Measuring rental yield provides a snapshot of the return on investment from a property for the purpose of rental income. Higher rental yields generally suggest higher income potential and lower investment risk.
Delhi NCR: The good and bad
The Metropolitan region of Delhi NCR, which includes the areas of Gurgaon, Noida and Ghaziabad, has a medium yield, with yields from 2.5% to 4%. Central Delhi has much lower yield potential as the area, and property costs more, but coming into the suburbs of Dwarka, Noida Extension, Sohna Road in Gurgaon, and others, are locations where repeat demand for rental housing has provided an opportunity for investment with a rental income return.
Mumbai: High Costs, Low Returns
Mumbai, India’s financial heart, has one of the world’s most expensive property markets. Rental yields in premium locations like South Mumbai and Bandra do not exceed 2% and 3%. However, peripheral locations (Navi Mumbai, Thane, Chembur) have started yielding much better returns (3.5%-4.5%) due to improved connectivity and affordability. Reeltor indicates that owners wanting to target better yields in Mumbai should focus on under-development corridors and newly launched projects.
Bengaluru: Driven by Technology
Bengaluru stands out as the best performing city in the property space among all Indian metropolitan cities and average rental yields in locations like Whitefield, Electronic City, and Sarjapur Road often cross 4.5%. The stability of job creation driven by a flourishing IT sector, and a large migrant workforce is what draws investors to the city for a balanced proposition between affordability and rental income. In addition, Reeltor reports consistent and increasing occupancy rates, along with increases in rental prices making Bengaluru a great fit for yield-oriented investors.
Chennai and Hyderabad: Rising Markets
Chennai and Hyderabad have become quite popular in recent times, due to their infrastructure developments and relatively lower property rates. Yields in both these cities are in the range of about 3%-5%. In localities like Gachibowli, Kondapur (Hyderabad) or OMR, Perumbakkam (Chennai) investors are witnessing great rental income and returns, especially in Hyderabad due to investor-friendly policies and tech driven developments as noted by Reeltor.
Kolkata and Pune: Steady Returns
Kolkata and Pune provide steady rental returns of 3-4%. In Kolkata, areas like Rajarhat and New Town have already reached the increased rental demand. In Pune, Hinjewadi and Kharadi have remained high yield due to IT parks and education. These cities are great options for conservative investors. According to Reeltor, consistent performance with stable income and growth potential is valuable.
Conclusion
Rental yields varied widely across Indian metro cities and were affected by location, infrastructure, employment opportunities, and property prices. At Reeltor, we deliver up-to-date market information, real estate listings, and investment intelligence to help you make better turns in real estate. Whether you’re purchasing your first rental property or expanding your rental portfolio, Reeltor will be with you in the evolving marketplace of real estate in India.
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