Rental income is emerging as a key consideration in residential real estate investment, with buyers who cite rental yield as their primary investment motivation recording the highest Housing Sentiment Index (HSI) of 119, according to the latest Housing Sentiment Index report by Magicbricks. The findings point to a shift in investment preferences, with buyers increasingly evaluating residential property for its income-generating potential alongside traditional motivations such as capital appreciation and ownership.
While capital gains and stability/ownership are each cited by 31% of respondents as reasons for investing in real estate, rental yield-focused buyers display the strongest housing sentiment. The HSI for this segment stands at 119, compared with 115 among buyers motivated by capital gains and 110 among those prioritising stability, ownership or an upgrade. This indicates stronger confidence among buyers evaluating property for its income potential.
The growing relevance of rental income is also supported by the improvement in residential rental yields over the past few years. According to the report, rental yields have increased from nearly 2% to around 3.6% over the past five years, strengthening the appeal of residential property as an asset capable of generating recurring cash flows while offering potential for long-term value appreciation.
This investment-led demand is particularly visible among second-home buyers. Among existing homeowners seeking a second property, 40% are aged 45–64, highlighting the significant participation of financially established and experienced buyers in the investment-oriented residential market.
Buyer confidence is also evident in the preference for properties offering opportunities for future value creation. Under-construction properties record an HSI of 129, compared with 116 for ready-to-move-in homes. The report attributes this stronger sentiment to factors including comparatively attractive entry prices, developer offers and the opportunity to benefit from price appreciation as projects progress towards completion.
Commenting on the findings, Prasun Kumar, Chief Marketing Officer, Magicbricks, said, “The strength of housing sentiment among buyers focused on rental yield reflects an important evolution in residential real estate investment. As rental yields improve, investors are increasingly looking at property through the lens of recurring income alongside long-term value creation. This combination is strengthening the investment proposition of residential real estate and reflects a more diversified approach to property ownership, particularly among buyers considering additional properties.”
The findings highlight the evolving role of residential real estate within investment portfolios, as buyers increasingly assess property not only for ownership and capital appreciation, but also for its potential to generate rental income.
