The demand for rental housing in Bangalore has seen a significant rise over the last few years. The reasons? Rising property values and a fluctuating job market. While the former has made owning a home a distant reality for many, the latter is restricting professionals from opting for a home loan.
Additionally, there has been a paradigm shift in mindset. We no longer live in a world where buying a home is a social obligation. A good percentage of millennials today prefer to rent a home as they want to stay closer to their workplace. This change in mindset and growing employment opportunities have worked well in favour of investors eyeing rental returns.
In this post, we have listed the top three areas in Bangalore that are good for garnering a high rental yield. But before we proceed, let’s understand what rental yield is. The return on investment (ROI) in rental investments is calculated using rental yield. It is the percentage of the property value that you earn as an annual rental income.
Gross Rental Yield = (Annual Rental Income / Cost of the Property) * 100
Let’s say you invested Rs 12 Lakh in a property, for which you get a monthly rent of Rs 10,000. The rental yield for your property will be:
Gross Rental Yield = (10000 * 12 / 1200000) * 100 = 10%
This yield is sans additional expenses like maintenance charges, taxes, non-occupancy, etc.
Now, let’s talk about the localities.
Electronic City
Established in 1978, Electronic City in South Bangalore is one of the most prominent IT hubs in the city. Located 20km from the city centre, it is one of the largest industrial parks in the country housing global majors, multinationals companies, and iconic firms.
Over 100,000 people are said to be directly employed here, which accounts for a large percentage of the country’s software and hardware exports.
Hosur Road (NH-7) runs parallel to the area which connects it to Silk Board Junction, Madiwala, and Brigade Road. Further, the Electronic City Bus Depot caters to the needs of all the other sub-localities in this region. The four-lane mixed corridor elevated highway takes a mere 15 minutes to reach E-City from Silk Board.
Property values: Rs 3,100-5,600 per sq. ft.
Monthly rentals: Rs 8,000-40,000
Sarjapur Road
Located in the eastern IT hub of the city, Sarjapur Road is another locality that gets sufficient rental demand. It owes its popularity to easy accessibility to the IT hubs of ORR-Marathahalli, Whitefield, and Electronic City.
“Due to its strategic location, Sarjapur Road has always been a preferred residential locality in Bangalore. Major IT parks like EcoSpace, Ecoworld, and Cessna Business Park are easily accessible from here. There are many schools, hospitals, and restaurants too,” informs Ashutosh Kumar, Lead, Home Buying Advisory Services, who recently helped a homebuyer buy an apartment in Sarjapur Road.
He further adds, “It is the perfect place for a family to live and work.” Apart from the IT hubs, this location also enjoys easy access to Koramangala and HSR Layout.
Property values: Rs 4,500- 6,300 per sq. ft.
Monthly rentals: Rs 7,000-55,000
Whitefield
Whitefield as a location needs no introduction. The jewel of the eastern suburb, it is one of the most preferred IT and residential catchments of Bangalore. The presence of IT companies along with good connectivity via the Outer Ring Road (ORR) and proportionate growth of social infrastructure are the primary reasons for high rental demand in the area.
“The demand for residential properties in Whitefield is very healthy. Connectivity to the central business district, the upcoming Metro corridor from Byappanahalli to Kadugodi under the phase-II of Namma Metro, and the proposed eight-lane peripheral road that connects Whitefield to other arterial roads of the city enhances the real estate potential of this region,” says Prashant Thakur, Head – Research, ANAROCK Property Consultants.
Property values: Rs 4,200-7,100 per sq. ft.
Monthly rentals: Rs 8,000 – Rs 50,000
The strong presence of IT/ITeS companies is the primary growth driver for all the three localities. Thus, these areas will always score high for rentals. However, since there is ample supply, the growth in rental yield will be gradual.
If budget is not a concern for you, areas like Indiranagar, Koramangala, and MG Road are good bets. The average monthly rentals in these localities range from Rs 40,000 – Rs 2 Lakh.
Simple tips to increase rental yield
- You can slightly increase the rental yield for your property by sprucing up the interiors. The demand for furnished apartments is high in Bangalore.
- Instead of investing in a spacious 2BHK apartment, invest in a smaller 3BHK. Apart from families, you can also rent it out to single professionals or students.
- Register your property for shared accommodation to ensure that the property doesn’t remain vacant for long.
Sarjapur has some of the great projects. Anyone looking out for flats can buy and give it for a rent. Returns are very high in these areas as mentioned above.
Thank you for such a informative blog.
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In the current COVID-19 pandamic situation, what are your thoughts on investing on rental properties? How long it might take to get rental income back to normal in Bangalore?