Yield Investing VRX Capital Intelligence — 12 August 2026

What Is a Good Yield on Pre-Leased Commercial Property in India?

A practical guide for yield-focused investors in 2026 — with live numbers from India’s commercial real estate market.

Every week at VRX Capital, we speak with investors who ask some version of the same question: “Is 6% yield good? Is 4% acceptable? Why is this bank property fetching only 3.5%?”

The confusion is understandable. A broker might quote “12% ROI” on one deal and “6% yield” on another — and both might technically be accurate, but measuring entirely different things. Meanwhile, a nationalised bank tenancy at 4% sounds low until you model what happens to capital value at exit.

This guide cuts through the noise. We use live data from our active inventory to show you exactly where the market sits today — and what yield you should demand before writing a cheque.

How Pre-Leased Yield Is Calculated

The calculation is simple. Yield is annual rental income divided by property price:

This is gross yield — before loan interest, maintenance, or tax. Net yield is typically 1–2% lower. When comparing deals, always compare like-for-like. A broker quoting “12% ROI” is usually factoring in capital appreciation assumptions, which are speculative. Yield, by contrast, is calculable on day one.

“Yield investing is not about finding the highest number. It is about finding the highest number you can defend — with tenant quality, lease tenure, and exit logic all stress-tested before you sign.”

— VRX Capital, Investment Philosophy

When Is a Lower Yield Still Worth Buying?

A nationalised bank at 4% sounds terrible compared to a retail outlet at 8%. But the risk profile is fundamentally different. Here is how to think through it:

The Escalation Factor: Why Today’s Yield Is Not the Final Number

Most investors fixate on the day-one yield. The smarter question: what does the yield look like in Year 4 or Year 7? A property offering 5.43% today with 15% escalation every single year (as with the Craftshed listing in our current inventory) will compound dramatically — reaching ~9.3% by Year 4. Meanwhile, a high-yield deal with no escalation clause is eroding against inflation.

Standard market practice is 15% every 3 years (roughly 4.7% per year compounded). Annual escalation — available in select retail leases — is significantly more valuable and should command a premium in your evaluation.

How VRX Capital Evaluates Pre-Leased Deals

VRX Capital works exclusively on institutional-quality commercial transactions — pre-leased retail, banking assets, and Grade A office. Every property goes through a four-layer evaluation:

1. Yield Verification — We recalculate yield independently. We do not rely on the broker’s number.
2. Lease Document Review — Escalation clauses, lock-in periods, exit provisions, and security deposit terms examined before any presentation.
3. Tenant Quality Assessment — MNC or nationalised institution, brand market presence, India expansion footprint, lease exit probability.
4. Financing Feasibility — We model the deal with and without leverage to show true return on own funds.

This is why VRX Capital maintains a curated pipeline rather than a broad listing aggregator. Every property on our platform has been reviewed by our team. Investors who work with us spend less time comparing incomparable numbers and more time evaluating real opportunities.

Frequently Asked Questions