What is the Rental Yield for Commercial Property?

Hi, I have been investing in Indian real estate for over 8 years now, with the majority of my returns coming through commercial properties. So, I can tell you about the rental yield for commercial property in India. 

On average, the commercial properties give out an average return between 8 to 11%. When you compare this with residential properties’ rental yield, which is between 1.5 to 3.5%, the margin is huge. So, investing in commercial real estate is the best way to move forward.

What is the Commercial Property Rental Yield in India?

Rental yield is the annual rental income which we yield from a property and is shown as a percentage of its total value. This rental yield helps in analysing the profit gained out of a real estate investment.

Here, I have shared the rental yields of three major cities in India, Delhi NCR, Bengaluru and Mumbai.

If I talk about the significant commercial spaces where the rental yield has been quite high, the answer is grade-A offices. So, these are the best spaces where you can look to invest right now. This year, I expect growth in commercial areas, such as hypermarkets, malls, high streets and supermarkets. The retail area can produce a rental yield of 8 to 9% on average.

What is the Formula to Calculate the Gross Rental Yield?

The formula to calculate the gross rental yield is,

Gross Rental Yield = (Annual Rental Income / Property Value) x 100

This is all regarding the rental yield of commercial property in India. I hope you find this information helpful.