- India’s average gross rental yield for residential: 2.5-3.5% — below most global benchmarks.
- Tier-1 IT cities (Bangalore, Hyderabad, Pune): 3-4% yield.
- Tier-1 luxury (Mumbai, Delhi, Gurugram): 2-2.5% yield.
- Tier-2 (Jaipur, Ahmedabad, Kochi, Indore): 3.5-4.5% yield but lower liquidity.
Why yields are low in India
Structural: rental regulation favours tenants; capital appreciation has historically done the heavy lifting of returns; high property taxes and maintenance costs; 30-40% income tax on rental income. Net yields after all costs are often 1.5-2.5%.
The real opportunity: yield + appreciation
Total return = gross yield + price appreciation. A 3% yield + 5% YoY appreciation = 8% pre-tax return, which is competitive with fixed income + equity when levered. The math only works if you hold 7+ years to amortize transaction costs (stamp duty + registration + brokerage + loan processing = 8-10% round-trip).
City-by-city breakdown
Bangalore: 3.3-3.8% (Whitefield, Sarjapur, Hebbal highest). Hyderabad: 3.5-4.0% (Gachibowli, Kondapur). Pune: 3.2-3.8% (Hinjewadi, Kharadi). Mumbai: 2.0-2.5% (Thane, Navi Mumbai slightly higher). Delhi NCR: 2.2-2.8% (Gurugram Golf Course Ext higher than Sohna). Chennai: 3.0-3.5%. Kolkata: 2.8-3.2%. Ahmedabad: 4.0-4.5%. Kochi: 3.5-4.0%. Jaipur: 3.5-4.0%. Indore: 4.0-4.5%.
How to pick
If cash-flow is the priority: Tier-2 affordable metros. If liquidity is the priority: Tier-1 IT cities. If capital appreciation is the priority: emerging Tier-1 corridors with infrastructure upcoming (e.g., Jewar-linked Noida sectors, Dwarka Expressway). See our city hubs for micro-market data.
FAQs
Should I factor in rental vacancy rates?
Are REITs a better way to get rental yield?
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