There’s more to Real Estate Investment than Residential Property

Jenny Richards By Jenny Richards, 30th Jun 2015 | Follow this author | RSS Feed | Short URL http://nut.bz/2dxs_hai/
Posted in Wikinut>Business>Investment

Very good reasons why you should be considering commercial property for your next real estate investment

There’s more to Real Estate Investment than Residential Property

Strangely enough most people thinking about investing in real estate may be considering only residential property. It could be because they see it as a good opportunity of parking excess funds in a second home that could be liquidated in a pre-decided time frame to meet a planned expense like a daughter’s marriage or for children’s higher education. They may simply also be more comfortable dealing with residential property rather than commercial or retail space.However, there are very good reasons why you should be considering commercial property for your next real estate investment.

Good Reasons to Invest in Commercial Real Estate

Typically the rental income from commercial property can easily surpass the income from residential property by a fair margin. Whether you are acquiring a new commercial property in upcoming residential Prabhadevi zones or buying a retail space with an existing tenant, it will not be out of the ordinary for you to receive gross rental income of 11-15% of the purchase cost per year. A comparable figure that would be obtained from a residential property could be as low as 3-5%. Leases for commercial property tend to be for longer periods and as a result have escalation clauses built in into the contract. The presence of a more mature and established market for commercial and retail spaces also provides faster exits when required. In fact, you can sell the commercial property even though there is a tenant in place.

It makes all the more sense for you to invest in commercial property if you already have made a large investment in your own home as the both types of property have different cycles. You can see this happening in the Mumbai market where residential property prices are climbing all the time.For example the prices of luxury apartments Prabhadevi are at levels never seen before,but commercial property is now only recovering slowly from some of the lowest levels in recent history making for a good investment opportunity. You can use the cyclical difference to your advantage as investing in only one type of property can expose you further to the downside and force you to lock both your investments in till there’s an upswing.

Why Is This a Good Time to Invest In Commercial Property?

The Indian economy that is to a great degree mirrored in the Mumbai real estate market, is poised to make rapid strides in the short and medium terms creating a huge opportunity for creation of new business ventures. This will create a very large demand for commercial spaces while the general confidence in the stability of the government and economy will catalyze retail spending pushing up the demand for retail spaces in the high street and malls. There is also a large number of foreign business enterprises poised to make forays into the Indian markets and they are looking with real interest in not only the metro cities but the tier 2 & 3 cities as well so your investment need not be hampered by lack of opportunities.

The Changing Real Estate Landscape

It is now possible for real estate investors even with limited budgets to invest in commercial and retail spaces due to the large availability of unit of various sizes. No longer do you have to worry about buying an entire building, beacuse the promoters and project developers are more than willing to sell off small units as per the investors’ desires. However, the ever escalating prices of residential real estate together with its relatively less liquidity are proving difficult for investors with limited investment corpus. Rental income from residential units may also be less predictable due to a huge oversupply in most of the markets.

Tags

Investment, Real Estate

Meet the author

author avatar Jenny Richards
I am a highly creative marketer who can always be trusted to come up with a new approach. I know that the client’s business comes first, and I never try to impose my ideas on others.

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Comments

author avatar Legend
2nd Jul 2015 (#)

Good strong tips.
When will beowulfing property become popular?

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author avatar Ptrikha
8th Jul 2015 (#)

Real Estate Investments mostly give good returns.

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author avatar Sarika
27th Mar 2019 (#)

Yes you are right. I also did investment on https://www.thetreegroup.in/properties.html . And I am very happy with it. I hope this will give me more returns

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