Real estate has been making tremendous progress as an industry with the introduction of reforms such as Real Estate (Regulation and Development) Act (RERA), Goods and Service Tax (GST) and Real Estate Investment Trust (REITs) in India.
It has been earlier observed that most first-time or one-time real estate investors are more inclined to invest in residential properties rather than in commercial ones due to reasons such as higher initial investment and greater risk factor. However, the scales are now shifting and the demand for commercial space is on the rise due to the below factors:
Regulatory Reforms: Owing to the e-Regulation of properties through RERA, developing and upcoming commercial properties are now expected to get streamlined throughout the country. Large co-working spaces, mixed-use developments, special economic zones and industrial zones are coming up all over the metro cities of the country aiming to amalgamate commercial with residential to guarantee ease of business by providing an established customer base and support to start-ups for wholesome development.
Investing Made Easy: Pooling capital and collective deals bear the mark of a commercial property investment. This syndication has been made easy by going large-scale through the recently introduced REITs which allow one and all to invest in massive property ventures. This step is an investment boost for commercial realties as the capital of smaller private or public non-listed equity firms and finance companies, private REIT companies, hedge funds and investment groups can be used for financing and realizing the deal. Additionally, simplifying the Foreign Direct Investment rules is also contributing to the revamping, professionalization and globalization of the real estate sector in the country.
Greater Rents & ROIs: Commercial properties have higher rental yields and greater Return on Investments than residential ones. Surely, a decent 2 BHK home in NCR has an average cost of around 35 – 45 lakh whereas a 500 sq. ft. commercial property in a premium neighbourhood has an approximate average price of 40 – 50 lakh but this fear of comparably higher initial investment fades away once the investor realizes that the 2 BHK home may only earn a 25 – 30K revenue per month while the commercial property will produce a rent of 70K and more per month. Also, multi-unit commercial properties are less risky than residential ones since they are not dependent on a single tenant to produce rent.
Cost Appreciation & GST: Commercial real estate generally undergoes a capital appreciation with time which makes it a lucrative option for life-long returns. Also, the introduction of GST has simplified the taxation process for the industry and it may also take down the final costing of properties while weeding out double taxation from the system.
Assured Returns: Prospective investors are being offered assured returns on purchase of commercial properties; this is beneficial from an investment perspective. Assured returns guarantee a certain amount of return for the buyers before possession.
Do remember that earning a good Return on Investment through a commercial property depends on choosing the right kind of venture too. A lot many factors count when choosing a premium commercial establishment, some of them are the locale and their residents, the kind of commercial demand in the area, transport connectivity to the place and probably the most important, the usable square footage of the unit.
Conclusively, investing in commercial real estate has always been a beneficial option for investors and it now has been made even more attractive with the regulatory and organizational reforms in the country resulting in the establishment of many world-class commercial developments wherein you can make a safe and secure investment.
Read More About……Reasons Why Investing In a Commercial Property is a Good Idea