Why Invest In Commercial Property?

Got a stomach for high adrenaline windfall return investment venture? Then commercial real estate sector is the right strategy for you.

This has not been typical of small investors in the past. Given to the high cost high commitment demands, institutional investors have been ruling the monarchy—but not anymore! With the market sentiment improving and investors getting savvier on the nuances of the market, retail sector and medium budget investors have joined in on the commercial property investment game.

So, when you plan to jump in, know that there are three ways you can take to approach it. Either you can buy it directly from builder, invest in shares of a realty developer, or put money in realty funds focused on commercial property investment.

Were you to choose the first method and enjoy complete ownership rights, current market trends work in your favour. Sensing the interest shown by middle class, builders have launched smaller units as well making it affordable for both consumers and investors. Now you have a myriad of options both in stand-alone high street units and shops in malls, which is a stark contrast to past trends. Financing is also butter smooth, with banks being keen to offer up to 60% LTV on commercial properties for borrowers with a clean credit score.

Considering the reasons people showed increased interests in this genre, there is a combination of factors that governed the general feeling. Foremost, the rental returns of it are way higher than residential properties. While a home in excellent condition can give back 3 to 4% of net worth annually, investment in commercial property can easily lead to 10 to 12% returns through rent. Second, the demand for office space is skyrocketing year after year across India. By 2015 it is expected to go up to 200 million sq ft.

Furthermore, hassle free renting ad longer leases typify these. The better rents, professional tenants and frictionless experience are only add-ons to the typical price appreciation that was the motto of the whole deal.