New policy likely to improve rental yield
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.