India’s rental market has stepped into an unusual moment of clarity. After years of soft yields and uneven demand across cities, the numbers now show a steady upward push. The country’s average gross rental yield has climbed to 5 percent in Q4 2025, up from 4.84 percent just two quarters earlier. It’s not a dramatic jump, but for a market long ruled by low returns, even small shifts are worth reading closely.
The spike in yields is tied to two storylines moving in parallel: capital values rising at a moderated pace, and rents growing faster than they have in several years. A demographic tilt toward younger households, a surge in job movement, and the slow but clear return of corporate renting have all helped tighten demand. The eight-city comparison offers a sharper view of how India’s rental economy is rearranging itself.
Mumbai: High prices, modest yields, but pockets shine
Mumbai remains a paradox. It’s the country’s most expensive housing market, yet rental yields are far from its price swagger. The citywide average sits at 3.15 percent, pulled down by steep purchase costs that outpace rent growth.
But the city isn’t a single story. Navi Mumbai stands out with yields touching 5.39 percent for compact units. Smaller apartments here rent quickly thanks to rising young-family demand and improved connectivity. Thane West also performs respectably, especially in the one and two-bedroom categories, where yields move between 3.5 and 3.7 percent.
South Mumbai and Central Mumbai show another side of the pattern. Prices here remain eye-wateringly high, but premium rentals have caught up in pockets. A four-bedroom in Central Mumbai now yields 4.87 percent, one of the highest returns in any luxury micro-market. Smaller homes, though, still struggle to match returns to their capital cost.
Mumbai’s story is essentially a tale of micro-markets where affordability decides performance. Investors chasing yields gravitate to Navi Mumbai and Thane, while long-term wealth seekers continue anchoring themselves in the core city.
Delhi: Strong yields driven by realistic pricing
Delhi has emerged as one of the better-performing rental markets, posting an average yield of 5.81 percent. South Delhi’s compact homes command high rents relative to purchase price, pushing yields near 9.6 percent for one-bedroom apartments. These are some of the highest returns seen in any Indian metro today.
The advantage comes from a rare balance: prices in many parts of Delhi haven’t escalated wildly, but rents—boosted by students, working professionals and short-lease demand—have remained healthy. West Delhi shows moderate performance, while the overall city portfolio stays attractive for investors seeking quick occupancy and predictable rent flows.
Kolkata: A quiet outperformer
Kolkata has quietly built a reputation for dependable rental returns. At an average of 5.79 percent, the city sits almost neck-and-neck with Delhi. South and East Kolkata micro-markets offer steady yields around the 5 to 7 percent range, with compact units doing especially well.
Unlike markets tied heavily to IT or corporate migration, Kolkata’s strength comes from stable, long-term tenants and moderate pricing. For investors, it’s a low-volatility market where returns may not skyrocket but rarely disappoint.
Pune: Rents catching up, yields improving
Pune’s rental demand has surged back, especially in IT-heavy corridors like Kharadi, Hinjewadi and Baner. The citywide yield now sits at 4.84 percent, but certain pockets outperform. One-bedroom units across tech suburbs regularly command yields between 5 and 7 percent.
Hadapsar stands out, with one-bedroom homes achieving yields over 7 percent. The push comes from young renters who prefer smaller, amenity-rich homes near work. Prices have risen, but not fast enough to dent rental profitability.
Bengaluru: A mixed bag, shaped by micro-markets
Bengaluru’s yields average 5.09 percent, but the spread between micro-markets is unusually wide. Tech-driven suburbs in the north, east and south record returns between 4.4 and 5.8 percent, thanks to ongoing job demand and high tenant churn.
West Bengaluru surprises with one-bedroom yields hitting 6.8 percent, one of the city’s strongest pockets. The central business district, however, shows the impact of overpricing. Luxury units in the heart of the city yield barely 1.5 to 2 percent, making them long-term appreciation plays rather than rental investments.
Hyderabad: Consistent but slightly behind
Hyderabad posts an average yield of 4.49 percent. While the city’s property market has grown rapidly in value, rents have only recently started catching up. The rental landscape remains stable, driven by IT demand, but yields are still lower than Pune or Bengaluru.
Chennai: Steady market, strong yields
Chennai’s rental market remains one of the most reliable in the country. With citywide yields at 5.76 percent, it performs better than Bengaluru, Pune, Hyderabad and even Mumbai.
One-bedroom units record returns above 6.5 percent, and larger units often touch 5 to 5.8 percent. A mix of manufacturing, IT and long-term tenant bases keeps the market steady.
Ahmedabad: Compact homes lead
Ahmedabad shows an average yield of 5.07 percent, driven mainly by smaller units. One-bedroom rentals yield up to 7.48 percent, reflecting the city’s strong appetite for budget-friendly housing. Larger homes see softer returns, but the overall rental climate stays healthy.
A rental market gaining shape
India’s rental trends are entering a more decisive phase. Rents are rising faster than prices in many cities, and tenant mobility is reshaping micro-markets. Investors who once hesitated at low yields are now watching a more balanced, opportunity-driven market.
