Commercial Real Estate Yield Benchmarks (2026)
Commercial properties (Grade-A Office, High-Street Retail, Warehousing) offer significantly higher cash yields than residential apartments.
| Property Sector | Gross Rental Yield Range | Standard Lease Term |
|---|---|---|
| Commercial Grade-A Office | 7.5% - 9.5% p.a. | 5 - 9 Years (3+3+3 Lock-in) |
| High-Street Retail Shop | 6.5% - 8.5% p.a. | 3 - 6 Years |
| Industrial Logistics / Warehouse | 8.5% - 11.0% p.a. | 9 - 15 Years |
Gross vs Net Rental Yield Formulas
- Gross Rental Yield %: (Annual Gross Rent / Total Property Purchase Price) * 100.
- Net Rental Yield %: [(Annual Rent - Property Tax - Maintenance - Insurance - Vacancy Loss) / Total Property Cost] * 100.
Income Tax Section 24(a) 30% Standard Deduction
- Statutory 30% Deduction: Under Income from House Property, every property owner automatically gets a flat 30% standard deduction on Net Annual Value for repairs/maintenance regardless of actual expense incurred.
- Cap Rate Benchmark: Prime Grade-A commercial office space in Bengaluru, Mumbai, and NCR yields 7.5% - 9.0% Cap Rates.
Rental Yield Benchmark
Residential property yields average only 2.5-3.0% in India. Commercial office premises and retail warehouses offer 3x higher yields (8-10%) with long corporate leases.