Is this the right time to invest in a commercial property?
As real estate prices hit rock
bottom, it is the best time for buyers and investors to get impressive capital
appreciation on the commercial property value. It also ensures higher rental
outcomes in comparison to residential property.
If you’re looking to invest in
real estate sector which is facing downtime, Commercial Property emerges out as
a better option as compared to residential property nowadays, from the
investment point of view.
Considering the excessive supply
in the Commercial Real Estate sector, prices are not so much high in comparison
to residential real estate.
According to a report, Delhi-NCR
gets the uppermost attentiveness of under-construction real estate projects in
the nation with about 33 per cent of the total value. The similar trend
prevails in Mumbai.
Due to a stable Central
government and a refreshed sense of confidence among the sector, there is high
speculation that there will be an increase in demand for office space.
Therefore, it can be said that investment in commercial property is a viable
option.
This way, one can get properties
at lower rates than residential properties and can also better yield from
rental income. Thus, there is chance for both capital appreciation as well as
regular income.
Below are a few batons on why it
is a wise investment now and what you must consider before investing into a
commercial real estate.
Trend of entrepreneurship
Commercial real estate is all set
to benefit from the surging number of new business that are being registered
every year. These enterprises are not only foreign-based businesses, but also a
number of Indian entrepreneurial businesses that have witnessed an impressive
growth over the years.
As entrepreneurs are no more
dependent only on foreign companies to invest and grow their business, there is
a more demand of commercial real estate in most of the Tier-I cities.
This is also clear from
statistics by the Reserve Bank of India, which reveals that swelling loans to
commercial real estate increasing with every passing year. In last six years,
the overall amount of borrowings for commercial real estate projects has almost
tripled.
Better assessment of commercial real estate
If you take into consideration
the valuations of commercial real estate and residential real estate, the
residential space has had its bull run. But commercial property has not had its
run since the downfall in the year 2008.
As per a recent report, Average
capital values in the office sector in India are still 25 per cent lower than
their most recent peaks seen in mid-2008.On the other hand, capital values in
the residential sector had surpassed their previous highest by end-2011.
Effect of change in government
A clear mandate to the central
government has resulted into improved confidence in corporate and in global
investor companies. Proposed changes in the FDI norms in real estate should
predict well and promote long -term investments in real estate.
The change in sentiment is
fueling capital inflows to India.
With various foreign companies
looking to start their business operations in India, they will need large
office space, which will increase demand for commercial real estate in the
coming years.
Higher yields
In India, the yields in
commercial real estate are one of the best in the world. While yields from
residential properties are around 3-4 per cent, in case of commercial
properties it is near 8 per cent, and can even go up to as much as 10 per cent
in some areas. Yields in commercial real estate are always a bit improved than
residential real estate.
If you are looking for impressive
rental yields to support your passive income and get wealth tax exemption, then
commercial real estate is the best option. However, capital appreciation in the
value of real estate is still much higher in residential real estate owing to
confine the demand.
Source: http://www.spectrummetro.com/blog/is-this-the-right-time-to-invest-in-a-commercial-property/





