Commercial real estate has always been into supply-demand rivalry for a long time. With the arrival of various multi-national companies, the real estate has opened the gate for the investors to invest in office spaces which had been blocked for past few years due to the global financial crisis and of course, the demonetization. Now, this is the right time when an investor can invest in commercial properties as the office spaces are now on the verge of high rental yields.
Although investment in real estate has been fruitful all the time, commercial properties have always been into consideration in order to harvest high returns on the investment. For a continuous flow of high income, office spaces have been the right choice for the investors since ever. Research and reports have declared that commercial properties generate about 5-7% more rental income than the residential properties.
Following 4 factors are good justifications for why is it the right time to invest in commercial real estate market –
India has become a land of startups, in last two years particularly. Thanks to the favourable policies and political moves that have supported the entrepreneurs of the country to come into the light and utilize their skills. Even 2018 is up with over a hundred of startups that include 50 tech startups. Around three-fourths of the total commercial space has been occupied by the IT sector and it has been the promising one in terms of constant revenue generation, long-term lease, and the quality tenants. The year is surely doing a favour to the investors, and the opportunity to invest in office space is not-to-miss one.
E-Commerce and Financial Segments
Over the years, e-commerce sector has grown with a speed of rocket. The segment is now covering a whopping demand in the commercial real estate market followed by BFSI (Banking, Financial Services and Insurance) sector. These segments are gaining a momentum in the market and expansion is what we can expect in near future. Business sentiments are about to improve and so, the absorption of quality spaces for their offices and commercial needs. High rental yields and low capital values are thus, given a thrust. Manufacturing, engineering, and pharmaceuticals are some more segments ready to uplift the segment in terms of the capital and ROI benefits.
Low Competition in Market
As most of the speculative buyers are investing in residential properties, commercial properties are witnessing low capital appreciation. This is in favour of the buyers to buy a commercial space at low price and earn high rental income for a long time.
Quality Tenants and Lock-in Lease Option
With the growing commercial segment in India, the quality tenants are easy to be found today. Lock-in lease option can be brought into the picture when good tenants are in. Moreover, finding tenants for the office space is always easier than that for the residential properties while to sell the latter off is easier than to sell off the commercial property – regardless of the situation and the age of the property.