Rent vs Buy: Navigating Rental Yields and Capital Growth in Top 7 Cities
Pune real estate, real estate trends, Residential Rental Values, Tax Benefits, Urban Migration
Pune Real EstateReal Estate TrendsResidential Rental ValuesTax BenefitsUrban MigrationReal Estate PuneSep 19, 2024
The Indian real estate market has witnessed significant growth in recent years, driven by urban migration, government initiatives, and increasing demand for housing. However, the market is not uniform, and different cities and micro-markets have distinct characteristics that affect rental yields and capital growth.
To understand the dynamics of rent vs buy, we need to look at the residential rental values and capital growth in key micro-markets of top 7 cities. Our analysis reveals that while some cities offer high rental yields, others provide better capital growth.
Pune real estate, for instance, has seen significant growth in recent years, driven by IT and manufacturing hubs. The city offers a rental yield of around 3-4%, which is relatively higher compared to other cities. However, the capital growth in Pune has been moderate, around 5-6% per annum.
In contrast, cities like Bengaluru and Hyderabad offer lower rental yields, around 2-3%, but have witnessed higher capital growth, around 8-10% per annum. These cities have seen significant investments in IT and infrastructure, driving up property prices.
Mumbai, on the other hand, offers a rental yield of around 2-3%, but has witnessed moderate capital growth, around 5-6% per annum. The city's high property prices and limited supply have kept rental yields in check.
Delhi-NCR has seen significant growth in recent years, driven by government initiatives and infrastructure development. The region offers a rental yield of around 3-4%, but has witnessed moderate capital growth, around 5-6% per annum.
Chennai and Kolkata have witnessed slower growth in recent years, driven by limited economic activity and infrastructure development. The cities offer rental yields of around 3-4%, but have witnessed lower capital growth, around 4-5% per annum.
So, what does this mean for homebuyers and investors? If you're looking for rental income, cities like Pune and Delhi-NCR may be a good bet. However, if you're looking for long-term capital growth, cities like Bengaluru and Hyderabad may be a better option.
It's also important to consider the tax benefits of buying a property. Under Section 24 of the Income Tax Act, homebuyers can claim a deduction of up to Rs 2 lakh on the interest paid on their home loan. Additionally, under Section 80C, homebuyers can claim a deduction of up to Rs 1.5 lakh on the principal amount repaid.Urban migration is another factor that affects the rent vs buy debate. With increasing migration to cities, the demand for housing is likely to rise, driving up property prices.
In conclusion, the rent vs buy debate is complex and depends on various factors, including rental yields, capital growth, tax benefits, and urban migration. While some cities offer high rental yields, others provide better capital growth. As a homebuyer or investor, it's essential to do your research and consider your goals before making a decision.
About JLL India JLL India is a leading international property consultancy, with a presence in 10 major cities across the country. The company provides a range of services, including residential and commercial property consulting, research, and advisory.About Cushman & Wakefield India Cushman & Wakefield India is a leading international property consultancy, with a presence in 10 major cities across the country. The company provides a range of services, including residential and commercial property consulting, research, and advisory.
Frequently Asked Questions
What is the rental yield in Pune?
The rental yield in Pune is around 3-4%.
Which city offers the highest capital growth?
Bengaluru and Hyderabad offer the highest capital growth, around 8-10% per annum.
What are the tax benefits of buying a property?
Homebuyers can claim a deduction of up to Rs 2 lakh on the interest paid on their home loan under Section 24 of the Income Tax Act, and a deduction of up to Rs 1.5 lakh on the principal amount repaid under Section 80C.
How does urban migration affect the rent vs buy debate?
Urban migration drives up demand for housing, which can lead to higher property prices.
What is the role of JLL India and Cushman & Wakefield India in the real estate market?
Both companies are leading international property consultancies, providing a range of services, including residential and commercial property consulting, research, and advisory.
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