Puducherry's Hidden Gems: Comparing Short-Term vs Long-Term Rental ROI in Karaikal, Yanam & Mahe
While White Town grabs the headlines, investors are now eyeing Karaikal, Yanam, and Mahe for hidden rental opportunities. These up-and-coming neighbourhoods offer great benefits with little competition, thanks to infrastructure developments and strategic location advantages in Puducherry's growing real estate market.
Short-Term Rental Potential: Karaikal, Yanam, Mahe Compared
Pondicherry averages 39% Airbnb occupancy, but new areas show different trends. Karaikal reaches 32% occupancy at ₹2,500/night for budget travellers, generating around ₹288K annually for typical properties. Yanam and Mahe, less touristy, use off-season demand with 28% occupancy at ₹2,200/night, earning ₹210K. December peaks drive 63% monthly revenue spikes, but monetisation needs smart marketing to handle seasonal changes.
Long-Term Rental Analysis: Stability Meets Growth
Karaikal offers gross yields of 6.5% with properties starting at ₹1,200/sq.ft commanding ₹15K monthly rents, better than White Town's 4.2%. Yanam and Mahe surprise with 7.2% yields—₹850/sq.ft entry points attract government workers looking for affordable housing. Importantly, maintenance costs are 15% below Pondicherry averages, boosting net returns through lower vacancy periods and minimal upkeep compared to heritage zones.
ROI Face-Off: Data-Driven Comparison
For ₹50L investments:
- Karaikal short-term: ₹288K revenue, ~₹200K net (6.5% ROI after expenses)
- Karaikal long-term: ₹180K stable rent, 6.5% gross yield
- Yanam/Mahe short-term: ₹210K revenue, ~₹140K net (5.6% ROI)
- Yanam/Mahe long-term: ₹189K rent, 7.2% gross yield
Long-term rentals consistently outperform short-term in yield stability across these neighbourhoods, though short-term models benefit from seasonal surges during December festivals. Net returns favour buy-and-hold strategies due to lower operational volatility.
Strategic Recommendations for 2025 Investors
Focus on long-term leases in Yanam/Mahe for top passive income yields. Karaikal works well for hybrid models—short-term during tourist seasons, long-term otherwise. Keep an eye on infrastructure projects like Karaikal's new transport links that could trigger 20%+ price appreciation by 2026. Always consider GST compliance and seasonal vacancy costs in your projections for realistic ROI calculations.