Real Estate has always been a preferred investment option for an average Indian. It is a great way of creating wealth and adding to your asset portfolio. But the asset class in real estate differs on the basis of its use- residential, commercial, hospitality and retail. Residential real estate has always been the first choice of the buyers as they have the option to either put it to their end use or to let it out on rent and earn a handsome rental return.
However, the trends of an Indian buyer seems to be changing lately. The escalation in the price of residential property and the slow rate of value appreciation are the two main reasons why a segment of investors is drifting towards commercial properties. The simultaneous increase in the price of commercial property has been lower than that of its residential counterparts. Records show that the commercial property in Noida has seen good price appreciation for the last few years.
About a decade ago, investment in commercial property was seen as an affair only the HNIs and ultra-rich could afford. However, with the help of attractive payment plans offered by the builders, now is the good time to invest your money in commercial real estate. Builders are also offering assured returns scheme under which the investors would get a predefined monthly returns till the property is under construction. The new business-oriented government has also revived the market sentiments. Campaigns like ‘Make in India’ would attract more capital inflow into the market escalating the demands.
Moreover, the young entrepreneurs in India are increasingly opting for their own start-ups for which they need well-planned commercial spaces. As per the reports for the commercial real estate in NCR, the rental returns are 8-11%. However, for a residential property, it is only 2-4%. The Real Estate Bill, that was only meant for residential property, would now cover commercial properties as well. This will bring more transparency in transactions. The REITs have also been set up to pool in investments into the real estate sector. With all factors being in favor of the investors, now is the right time to invest in commercial real estate.