Rental Yield: Gross, Net and the Number That Actually Matters
Short answer: gross yield is annual rent divided by property value; net yield subtracts CAM, maintenance, property tax, vacancy and income tax. In Indian metros the two differ by roughly a full percentage point, and only the net number should ever be used.
Gross residential yield, Gurgaon
3.2–4.2%
Net residential yield
2.6–3.4%
Standard deduction on rent
30%
Net pre-leased commercial yield
7–9%
What the data says
Gross yield = annual rent ÷ property value. Net yield subtracts CAM, repairs, property tax, vacancy provision and tax on rental income.
CAM in branded Gurgaon societies runs ₹5–9 per square foot monthly, which is the largest single deduction for most owners.
A one-month annual vacancy provision reduces yield by roughly 8% of gross rent and should always be modelled.
The 30% standard deduction under house property income improves the after-tax picture meaningfully for higher-slab owners.
How EstateVeda executes this
Compute yield on registered value including stamp duty, not on the base price.
Source comparable rents from registered leases in the same tower or pocket.
Deduct every recurring cost line explicitly rather than applying a blanket haircut.
Recompute annually as rents escalate and property value moves.
Risks we underwrite against
Marketing material almost always quotes gross yield on base price, overstating reality by a wide margin.
Assured-return schemes present a subsidised yield that ends when the subsidy does.
Ignoring vacancy in a high-supply micro-market produces a yield that never materialises.
EstateVeda verdict
Use net yield on registered value, always. In Indian metros, expect 2.6–3.4% net residential and 7–9% net on well-underwritten pre-leased commercial.
Frequently asked questions
How do I calculate rental yield?
Divide annual rent by the property's registered cost for gross yield, then subtract CAM, maintenance, property tax, vacancy provision and income tax to reach net yield.
What is a good rental yield in Gurgaon?
Anything above 3% net on residential is strong. Pre-leased commercial in the same city delivers 7–9% net with a credit-worthy tenant.
Why is Indian rental yield so low?
Residential prices are driven by owner-occupier demand and land scarcity rather than investor cash-flow requirements, which compresses yield relative to capital values.