What is Rental Yield? How to Calculate
Rental yield is the annual rental income generated from a property expressed as a percentage of the property's market value or purchase price. It is the key metric investors use to evaluate the income-generating potential of a real estate investment and compare it against alternative asset classes.
The Rental Yield Formula
Gross vs Net Rental Yield
Gross rental yield considers only the rental income against the property value, without accounting for expenses. Net rental yield deducts annual expenses such as maintenance charges, property tax, insurance, vacancy periods, and management fees from the rental income before calculating the percentage. Net yield gives a more accurate picture of actual returns but is harder to calculate precisely.
Example Calculation
Consider a Fab Luxe 3 BHK apartment purchased at Rs 2.96 crore that generates a monthly rent of Rs 50,000.
- Annual rental income: Rs 50,000 x 12 = Rs 6,00,000
- Gross rental yield: (6,00,000 / 2,96,00,000) x 100 = 2.03%
- If we account for current market value appreciation to Rs 3.5 crore and annual expenses of Rs 1,00,000:
- Net rental yield: ((6,00,000 - 1,00,000) / 3,50,00,000) x 100 = 1.43%
Note: Rental yield is typically calculated against the purchase price rather than current market value for measuring investment performance. Against the purchase price, the yield appears more favourable as the denominator remains fixed while rents increase over time.
Typical Rental Yields in Noida
- Standard apartments (Greater Noida West): 2.5 to 3 percent gross yield
- Luxury apartments: 3 to 3.5 percent gross yield
- Fab Luxe (projected): 3 to 4 percent gross yield, driven by premium positioning, AQI management, and Forbes brand demand
- IT hub proximity (Sectors 62/63): 3 to 3.5 percent, supported by strong corporate tenant demand
While Noida's rental yields may appear modest compared to commercial property, the combination of yield plus capital appreciation of 12 to 18 percent delivers a total ROI of 15 to 22 percent, making it one of the best-performing asset classes in India.
For a deeper analysis, read our Noida Real Estate Investment Guide 2026.