How it's calculated
Net yield is the better metric for comparing properties because it normalises away differences in society fees, maintenance, and tenant turnover. Gross yield is what brokers often quote — useful for headline comparison but not for actual decisions.
Yield benchmarks (India, FY 2024-25)
| Property type / city | Typical gross yield |
|---|---|
| Residential — Mumbai | 2.0 – 2.8% |
| Residential — Bengaluru / Pune | 3.0 – 4.0% |
| Residential — Tier-2 cities | 3.5 – 4.5% |
| Commercial — Grade A office | 7 – 9% |
| Commercial — Retail high-street | 5 – 7% |
| REITs (post-2019) | 6 – 8% (distribution yield) |
Bank FD rates are 6–7.5% as of FY 2024-25. Direct residential rental investment usually loses on yield alone — the case relies on capital appreciation to make up the gap.
FAQ
Should I include EMI in expenses?
Not for yield calculation — yield measures the property's return on its own value, not your leveraged return. For levered return, use the rental property calculator which computes cash-on-cash including loan payments.
What about appreciation?
Yield captures only the rental income side. Total return = rental yield + appreciation. Use the property appreciation calculator for the second component.
How do I model vacancy realistically?
5% (≈ 18 days/year) for established properties in high-demand areas. 8–10% (≈ 1 month/year) for newer projects, smaller cities, or commercial. 15%+ for harder-to-rent specialised properties.