Many people are looking to invest in real estate to gain lucrative rental revenue. But which type of property would provide more rental return is a question that often creates a perplexing situation among the investors and derails the decision-making process. So, can residential generate better rental revenue or commercial and retail property?

In the following blog, I have tried my best to critically analyse the advantages and disadvantages of investing in residential and commercial real estate, especially in the context of rental income. Go through it and clarify your doubts in this context.

  • Factors Determining the Growth of a Rental Revenue
  • Things to Consider Before investing in Commercial Property
  • Things to Consider Before investing in Residential Property
  • Pros and Cons of Investing in Residential & Commercial Property

➢ Taxation Advantages
➢ Risk Factors & Volatility:
➢ Liquidity Factors & Portfolio Management
➢ Property Verification

  • Risks & Rewards of Investing in Commercial Property
  • Risks & Rewards of Investing in Residential Property
  • The Way Forward
  • Prominent Commercial Properties in Noida 

Factors Determining the Growth of a Rental Revenue

Rental revenue is indeed a matter of major concern for real estate investors. According to some prominent real estate professionals, there is a range of diversified factors that determine the rental outcome of a residential and commercial property. These factors are listed as follows.

  • Location of the property
  • Quality of construction
  • Age of the property
  • Usage & asset condition

Things to Consider Before investing in Commercial Property

There are different types of commercial property. It can be an office, a retail shop, or a warehouse. But, as per the expert’s opinion, a potential investor must consider the following aspects before investing in any commercial property. It is highly essential to consider these factors as they determine the growth of your rental revenue in the short and long terms

  • Condition of the present leasing environment
  • Pre-existing business environment in the region
  • Connectivity to major & auxiliary industries
  • Connectivity issues & job opportunities nearby
  • Legal clearances required to use of a property

Things to Consider Before investing in Residential Property

While the potential of commercial real estate is often judged by its ability to create a business-friendly environment, residential properties are often evaluated based on livability factors such as social infrastructure, road and connectivity, neighbourhood, amenities and locational advantages. So never forget to assess the potential of a residential property based on these factors as mentioned above.

Pros and Cons of Investing in Residential & Commercial Property

Taxation Advantages

Rental revenues coming out of all sorts of leased property, be it residential or commercial, inevitably falls under the tax code. But in case the property is purchased through a home loan or some sort of business loan, the owner can also apply for tax exemptions, as per the rules and regulations mentioned in section 24 and section 80C of the Indian Income Tax Act.

Risk Factors & Volatility 

The risk factor is always higher in residential properties. It happens because of the below-mentioned reasons.

  • Uncertainty in Tenant’s Occupation
  • Higher Maintenance Cost
  • Lower Rental Returns

As compared to residential properties, commercial offices and retail shops offer better stability, higher rental appreciation, Long term revenue extraction and last but not least, the legal assurances related to tenant’s stability.

Liquidity Factors & Portfolio Management


Commercial office spaces and residential units-both of them are considered liquid assets. But in India, the availability of best-in-class pre-leased commercial office spaces and retail shops is way lower than the average supply of residential homes, flats and apartments. Consequently, it creates a vacuum in the market and inflicts a heavy demand while making the existing stockpile of vacancies more liquid than residential properties.

 Property Verification

Prevention is better than cure! So don’t forget to verify the location and the RERA number of the project. It is also important to see whether the project location has enough potential to grow or not. Find out whether the location is closely connected with essential public facilities like markets, hospitals, business malls and as well industrial zones.

 Risk & Rewards of Investing in Residential Property

 Risk :

  • Lower Rental Yields
  • No Interior Decoration
  • Self-renovation is costly
  • Fluctuating Prices
  • Uncertain Market
  • No minimum size
  • Short rental agreements, not exceeding 36 months


  • Small/Minimum Entry Ticket
  • Plenty of Loaning Facilities
  • Easy Loan Procedure
  • Ease of Leasing
  • Short Holding Period


Risks & Rewards of Investing in Commercial Property


  • Stable Capital value for a longer period
  • Fewer Buyers In the Market
  • Difficult to offload


  • Rental Return is Way Higher
  • Long term Leasing is possible;

Up to nine long years

  • Stable Market Prices
  • Bare shell or warm shell leasing
  • The non-volatile commercial value

The Way Forward: 

If you compare residential and commercial properties from an investment perspective, especially in terms of rental yields, you will find that commercial properties are way more capable of generating high rental revenue than traditional residential units. Unlike residential units that are leased yearly, commercial properties are usually leased for a longer time, at least up to nine years, and there are no risks like tenant turnovers.

Prominent Commercial Properties in Noida

 Commercial complexes like Bhutani Cyberthum and Bhutani Alphathum are the two most impressive commercial complexes in Noida, offering commercial offices and retail spaces with assured return of investments. These premium-class offices come in lockable and unlockable segments and offer fully furnished lucrative commercial office spaces for lease and rent in Noida, with an inbuilt best-in-class working environment, special business facilities and entertainment zones.