How to Calculate Rental Yield on Indian Property (Gross vs Net)
Rental yield is the single most misquoted number in Indian real estate because brokers rarely net out CAM, vacancy and tax. This page shows the exact formula, a worked example on a ₹2 Cr Gurgaon flat, and where the gross-versus-net gap typically hides.
Yield formulas — gross & net
2
Realistic net yield band
3.4–4.4%
Vacancy factor to model
7–9%
CAM drag on luxury stock
30–50bps
What the data says
Gross yield = (Annual rent ÷ Property price) × 100. On a ₹2 Cr flat renting at ₹55,000/month, gross yield = (6,60,000 ÷ 2,00,00,000) × 100 = 3.3%.
Net yield deducts CAM, property tax, vacancy loss and repair reserve from annual rent before dividing by price — this is the number that actually compounds.
Worked example: same flat, ₹66,000 CAM + ₹18,000 property tax + 8% vacancy loss (₹52,800) leaves net rent of ₹5,23,200, giving net yield of 2.6% — nearly 70 bps below the headline gross figure.
Run your own numbers on the EstateVeda Yield Calculator at /knowledge/calculators/yield rather than relying on a portal-quoted gross figure.
How EstateVeda executes this
Pull actual registered rent from lease deeds or verified tenancy data, not portal asking rents.
Layer in CAM, property tax, vacancy and management fee before computing net yield.
Benchmark the result against the corridor's realistic net-yield band, not an all-India average.
Recompute annually as rent escalates and CAM resets.
Risks we underwrite against
Quoting gross yield to a buyer as if it were net overstates return by 60–120 bps.
Ignoring vacancy in high-turnover micromarkets inflates yield estimates materially.
EstateVeda verdict
Always underwrite on net yield. Treat gross yield as a screening filter only, never as the number you commit capital against.
Frequently asked questions
What is a good rental yield in India?
Net yields of 2.5–3.5% are typical for luxury residential in NCR metros, while 3.5–4.5% is achievable in corporate-catchment mid-luxury stock. Anything advertised above 5% net deserves scrutiny of the underlying assumptions.
Is rental yield the same as ROI?
No. Rental yield measures only income return on price paid. ROI (see /knowledge/calculators/roi) also captures capital appreciation and total cash invested, giving a fuller return picture.
How often should yield be recalculated?
At every lease renewal, since rent, CAM and property tax all move independently. An annual recalculation keeps the portfolio yield figure honest.