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Rental Income From Residential V/S Commercial Real Estate
June 22 2018

Rental Income From Residential V/S Commercial Real Estate

Real estate investment is one of the most stable and lucrative forms of financial investment in India. One of the best ways to earn a passive income is by investing in real estate. However, first-time investors are often unsure of whether to invest in residential or commercial real estate, especially in the context of rental income. As a blanket statement, it is safe to say that commercial real estate offers a significantly higher rental yield than its residential counterpart. Having said that, it is important to take into consideration the prevailing market conditions, the location, size and layout of the property, the builder’s reputation and the procurement price of the property before making an investment.

Here’s a quick overview comparing the rental income from residential and commercial real estate.

Overview of investing in residential real estate

  • Steady source of rental income with marginal increase every year
  • Uncorrelated and mostly unaffected by prevailing market conditions
  • Lower investment cost
  • Availability of tax benefits
  • Flexibility to use property for various purposes
  • Shorter lease periods
  • High risk of delay in possession
  • Responsibility and costs of all repairs and maintenance

Overview of investing in commercial real estate

  • Source of regular and sizeable rental income
  • Very high rental yield, depending on certain factors
  • Longer lease periods
  • Higher investment cost
  • Rental value increases with capital appreciation

Rental income comparison between residential and commercial real estate

The rental yield on residential properties is not very attractive when it comes to ready-to-occupy homes in India. However, if an investor is looking at large scale investment made at an early stage, then the rentals could be comparable to those of a commercial property.

On the other hand, commercial property investment in India fetches somewhere between 6-10 per cent rental yield, depending on the quality of construction, location of the property and market conditions. This could translate into something like an annual rental income of Rs. 40 lakhs on a well-located commercial property worth Rs. 4-5 crores.

Looking for premium commercial office spaces in Kharadi Pune? Gera's Imperium Alpha presents commercial property for sale in Kharadi Pune


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It was indeed a pleasure being a part of the Christmas celebrations at Astoria. Kudos to the Gera team for bringing in such a wonderful event with great carol singing participation from our own kids. It brought in the spirit of Christmas and the games, Santa, the gifts only added to it. Thanks for organising such a wonderful event which helped in community building...looking forward to many more such celebrations!

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The Christmas event organised at Astoria was a big success and a big step in bridging the gap between us and Gera. It was a memorable event as we are still in the beginning of our journey of life in our little home at Astoria. The kids have been the happiest of all and what more can we ask for when we see smiles on the faces of our little ones. Kudos to you and your team for making this event a huge success! Looking forward to many more in the years to come.

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The Christmas party organised by Gera at Astoria this year was a great success with good participation from kids and parents. Our children Sia and Saish enjoyed the party to the fullest. Sia, in particular, had a gala time and reiterated her stand that Anita aunty's parties are THE BEST.... We as your customers take much pride in informing our friends that such goodwill gestures are one of the many differentiators Gera brings to us, which no other builder in Goa can boast of. Many thanks to you and your team for doing an excellent job in putting up this event. We look forward to the next one! A big thanks to the Gera Management for its efforts in community building.

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