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Rental Yield (Annual Rent / Property Value),

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   Amir
Wednesday, February 22, 2012 09:16 PM 
Reply: >
My question is about rental yield %(Annual Rent / Property Value *100) in Pakistan.
It appears, generally in Pakistan, Commercial properties have much higher rental yield as compared to Residential.
What percentage of rental yield in Pakistan is considered satisfactory in mature properties or commercial areas where property's appreciation is expected to be at par with inflation?

Appreciate, sharing your experiences or some relevant studies/research.

Thanks in advance.

Amir
muhammad replied on Wednesday, February 22, 2012 11:52 PM 

I think 6.85% should be enough not more tha it.
FX replied on Thursday, February 23, 2012 03:50 AM 

Dear Amir, very relevant question though there may not be an answer to this question on this forum because of non-availability of data. I just have a vague idea and that is based on observation; for commercial rental yields in mature areas are around 6-7% and for residential it is around 3-4%. These are the general figures that im giving though there could be huge variation depending on the area.
informer replied on Thursday, February 23, 2012 04:16 AM 

My collegue live in 10 marla house at Askari 10 he is paying rent @32000 and annul rent goes to 384000. price of house is around 80-85 lacs this yield is around 4.5 to 5%.
rana replied on Thursday, February 23, 2012 01:21 PM 

10M house I rent out in Bahria has a yield of 4.62%. House value I used in the calc is what I spent on land+construction. Market price may be higher making the yield a little lower.
Jameel replied on Thursday, February 23, 2012 08:55 PM 

a well located well constructed house yields about 5 to 6% rent and 7 to 8% annual appropriation, at the same time there is some management involved and building is fancy type or thekedar built it has about 5% annual deprecation of building.
On the other hand a new house when rented for about 6 months loses 25% of its total value and is labelled as used.
The yield is best in small houses better locations nearer the cities, and should have solid construction and lesser wood work.
Flats yield about 10% yield but price appreciation is minimal
Umair (Ny, USA) replied on Friday, February 24, 2012 07:42 PM 

3-7% sounds about right. But friends, dont forget the biggest factor that takes away from Real Return (price adjusted profit), and that is of course, inflation rate north of 15%, and 38% currency depreication relaltive to USD in last 4 yrs. So technically, Negative Real Rate of Return by investing in properties in Pakistan. You lose money by investing in Pakistan. However, the GOOD NEWS is that the appreciation of the properties in DHA Lahore in some cases has outpaced the negative real rate of return(depending on when the property was bought of course).

Umair.
New York University.
USA
Umair (Ny, USA) replied on Friday, February 24, 2012 07:45 PM 

:pkf :pkf :pkf

Pakistan Zindabad
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