Over the years, Greater Noida has evolved to be the most potential investment hub in Delhi NCR. However, rental yields in the city were a great concern over the years with properties only offering a meagre 1-2% rental yield and the maximum being in just 4-5 locations in Noida with around 2-3%. But that has changed drastically post covid period in the region.
There have been a few simple reasons for this low rental yield:
1. Unfurnished or semi furnished properties-
A major percentage of the population in Noida has been people who have migrated to the city for work opportunities. A large unused inventory of unfurnished/ Semi furnished properties has made these less desirable for rental seekers in the city.
Over the last 2 years owners Noida has seen a large adoption of property owners moving towards renting houses in a fully furnished state. This has highly increased their properties rental income and has helped in generating a stable longterm cashflow with a good eye on the returns.
Going by the responses from Zennlivving.com’s market survey, A Well done fully furnished property not only fetches a good 70-80% higher rent but also increases your chance of renting it out quickly by more than 60%.
2. Lack of a consolidated property maintenance team:
A property with less amenities will result in lesser care in taking care of the properties and since owners manage these properties directly, there is no way of ensuring that regular maintenance happens to these properties. On average, an owner loses anywhere between 25,000-35,000 INR in repairing and managing a property over a year. With the large number of properties being unrented, owners also lost out on the rental income while the maintenance amount remains fixed. Thus resulting in losing money to maintain the property than the rental income they generate and hence leading to negligence in maintaining the property.
3. Tenant interest consolidated to a few areas:
Tenants moving into the city has generally shown major interest towards a few areas in the city owing to various factors like metro connectivity, Office connectivity, transportation, markets nearby etc…
Formula to calculate rental yield:
Gross Rental Yield = (Annual Rental Income/ Property Value) x 100
Net Rental Yield = Gross rental yield – maintenance charges
Average rental yield for a property in Noida has been
For a monthly rent of 15,000 INR,
Gross Rental Yield= 1.8/75*100= 2.4 Rental Yield.
For furnished properties, managed by professional long term rental management agencies:
For a monthly rent of 35,000 INR, Keeping the furnishing cost at 10 Lakhs for a 3bhk
Gross Rental Yield= 4.2/85*100= 4.9 Rental Yield.
Based on Zennlivving.com’s market statistics
Ways property owners have increased their rental yield:
The most secure way to boost maximum rental revenue is to learn how to maintain constant cashflow from real estate by renting out your investment property in metro cities utilizing the suitable strategy.
- Choosing the most effective rental strategy:
Choosing the right way to rent out your property matters the most. In general, the owners rent out using 3 methods- Rent them out themselves, Through brokers and property management companies and through rental management companies.
- Calculate the potential of your rental property: If it is an investment property, such as an apartment, you should consider renting it out on Airbnb or other platform to generate maximum rental income mainly targeting out of the city visitors or tourists seeking short term rental options. The occupancy rate is another metric. It reflects the average percentage of the month or year that rental properties get occupied. These real estate investment indicators are a powerful tool that all landlords must use to boost rental revenue. As a result, the higher your rental income, the higher your cash flow and cash on cash return.
- Amenities enhancement: Improving your real estate asset by furnishing it well is a proven method to increase the rental income from a property. Always keep the fundamental aim of the investment property in mind while deciding the cost factor. The primary motive should be to generate revenue and earn profit from your real estate investment. By improving your real estate asset, you may be able to raise the rent on it and increase your rental income.
- Preserving the occupancy of your rental property: Whether a bare shell or a furnished property, you only earn an income if the property is rented out. Finding a long-term tenant or using rental management firms are the right way to ensure you have a stable steady rental return. An empty investment property loses you money and diminishes your annual rental earnings
Zennlivving.com is one of India’s largest real estate investment and marketing firm operating across the country that invests, partners and works with real estate developers, channel partners and property owners maximising profit yields for all its stakeholders.
