Pre-Leased Property Yield Explained with Examples

Here’s a clear, no-nonsense explanation you can use for investors, clients, or even as content for your website or Instagram.

What Is Pre-Leased Property Yield?

Pre-leased property yield tells you how much return you earn every year from a property that already has a tenant and rental income in place.

In simple words, it answers one question:
“If I invest this amount today, how much yearly income will I get in percentage?”

Yield Formula

Yield (%) = (Annual Rental Income ÷ Property Purchase Price) × 100

Example 1: Retail Shop (Common in India)

• Purchase Price: ₹1.50 Crore
• Monthly Rent: ₹45,000

Annual Rent:
₹45,000 × 12 = ₹5,40,000

Yield:
(5,40,000 ÷ 1,50,00,000) × 100
= 3.6% Yield

This is typical for prime market areas where safety and appreciation matter more than high returns.

Example 2: Commercial Office Space

• Purchase Price: ₹1.20 Crore
• Monthly Rent: ₹80,000

Annual Rent:
₹80,000 × 12 = ₹9,60,000

Yield:
(9,60,000 ÷ 1,20,00,000) × 100
= 8% Yield

Higher yield usually means slightly higher risk or a less premium location.

Example 3: Long-Term Corporate Lease

• Purchase Price: ₹2 Crore
• Monthly Rent: ₹1,40,000

Annual Rent:
₹16,80,000

Yield:
(16,80,000 ÷ 2,00,00,000) × 100
= 8.4% Yield

Such properties are popular because of stable income and long lease terms.

Good vs Average vs High Yield (India Context)

• 3% – 5% → Prime locations, very safe, low vacancy risk
• 6% – 8% → Balanced return and risk
• 9%+ → High return, check tenant strength and lease terms carefully

Why Investors Prefer Pre-Leased Properties

• Immediate rental income from Day 1
• No tenant-search hassle
• Easier to estimate returns
• Popular with passive investors

Important Things to Check Before Investing

• Tenant profile and business stability
• Lease duration and lock-in period
• Rent escalation clause
• Location demand and resale potential