New pol­icy likely to im­prove rental yield

HT Estates - - FRONT PAGE - -Van­dana Ram­nani

If the rental pol­i­cyp is able to ad­dress thet fears of land­lords and bring more hous­ing stock in the am­bit of rental hous­in­hous­ing, it will help im­prove rerental yield in times to come. In IndIn­dia, the resid­den­tial rental yield is about 1.5% to 3%. Ex­perts say that if the pro­pos­al­spropo un­der­lined­lined in the dr­draft pol­icy are im­ple­mented im­ple­mented, res­i­den­tial prop­er­ties in In­dia, too, will be able to achieve a yield of 4% to 6%, as is the case in de­vel­ode­vel­oped mar­kets. The rental yield of res­i­den­tial den ti al units is ex­tremely low in In­dia aat about 1.5% as com­pared to com­mer­cial­cial proper ti prop­er­ties for which the yield i is any­thing be­tween 5% tto 10%. Also, the value of a com­mer- cial prop­erty is a de­riv­a­tive of rental value un­like in a res­i­den­tial prop­erty where the cap­i­tal value is the most im­por­tant de­ter­mi­nant. It is be­cause of this rea­son that most peo­ple in In­dia pre­fer to lease out com­mer­cial prop­er­ties but wait for prices of res­i­den­tial prop­er­ties to ap­pre­ci­ate, says Mu­das­sir Zaidi, na­tional director, res­i­den­tial at Knight Frank In­dia. The rent of most com­mer­cial prop­er­ties de­pends on the qual­ity of the build­ing and lo­ca­tion. Res­i­den­tial prop­er­ties on the other hand give a yield of only 1.5% to 3%. Glob­ally in de­vel­oped mar­kets, the rental yield for res­i­den­tial prop­er­ties is any­thing be­tween 4% to 6%, Zaidi says, adding that the pro­pos­als out­lined in the draft Pol­icy can im­prove rental yields in fu­ture.

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