Rental income highest in India
THE RENTAL income from investment in commercial property in Indian metros is highest in the world, offering almost double returns as compared to capital market, according to a global realty consulting firm.
"Returns from rental income on investment in commercial property in metros is around 10.5 per cent and is the highest in the world," Knight Frank said in its latest market updates.
In case of investment options such as bank deposit and bond, the returns are in the 5.5 per cent to 6.5 per cent range, it said. Attributing the swelling up of commercial real estate demand to IT and BPO boom, the report said, "the Indian real estate market is upward bound."
The increasing demand from IT/ITES and BPO sector has led to a 20 per cent to 40 per cent rise in capital values for office space in the last 12 to 15 months across major metros.
However, Grade-A office property net yields came down from 12 to 14 per cent in 2003 and currently averages between 10.5 per cent and 11 per cent. The fall in yields has resulted from decreasing interest rates and increasing appetite from investors.
The net yields, after accounting for all outgoings, on residential property stands at 4 per cent to 6 per cent.
However, capital values for residential sector have risen by 25 per cent to 40 per cent per annum in last 15 to 18 months.
Capital appreciation in retail property stands at 20 per cent to 35 per cent with high-risk factor on investment.
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