Real estate rental yields low especially for villas and high value properties

A report on rental yields in the residential sector has revealed that villas and similar high capital value assets have lower yields, and, in general, markets with cheaper real estate had higher rental yields.

These are some of the interesting findings of a study done across 14 cities by a property site Magicbricks.

According to the report, with 3.9% return, Kolkata has the highest rental yield, followed by Bengaluru, Hyderabad, Ghaziabad and Ahmedabad, even as average yields remained low at around 3 %, with large format and high capital asset value residential properties having sub-3 % yields.

Magicbricks data also revealed that properties for rent are 10% smaller in size as compared to properties available on sale. The study concluded that residential investment purely on the basis of rental yield is not sustainable, especially considering the fact that national rental yield average at 3% is less than half the prevailing fixed deposit rate offered by the banks. Oversupply had impacted returns, the report concluded.