Truth be told, we Indians have a soft spot when it comes to investments, and we are more prone to investing in Gold and Real Estate than anything else. If we talk about real estate investment, the residential real estate market is floating because of its homeownership sentiment, but lately, there has been a slight shift observed in the scenario. Many investors are now finally understanding the potential of commercial real estate and the advantages that tag along with them. Despite the fact that residential real estate has a lot of offers, as an investment, they fail to offer returns as high as commercial real estate.
Investing in commercial real estate has always been an attractive option in India. If we see the Indian economy, a large consumer base is set up by MNCs, and it will continue to grow, which will keep the requirement for commercial properties high. Eventually, it will make investing in commercial real estate an attractive option keeping in mind the proposition with rentals and resell prices will also increase, particularly because of the adverse effect of COVID-19.
Even if the real estate market is coming back on track after the pandemic, the residential real estate market has not yet picked up the pace compared to commercial real estate.
However, investing in commercial real estate must be done with thorough research. It is important for an investor to keep in mind a certain checklist when thinking about investing in commercial real estate. Firstly, do thorough research and understand the future market potential by determining the demand, supply, and rental dynamics of future market potential for the next 5 years.
Thanks to the internet, anyone can become a commercial real estate investor. Today in this article, we are going to understand the benefits of investing in commercial real estate and what points investors should keep in mind when investing in commercial real estate.
Why invest in commercial real estate?
Commercial real estate includes retail stores, shopping centres, shops, office spaces, warehouses, pubs etc. The question here is why one should invest in commercial real estate in the first place? But don't worry, the solution is covered in the below-mentioned points-
1. The huge profit
Of course, sailing in the ocean of huge profits is the reason why anyone would invest in something in the first place. Commercial real estate is a promising place where one will definitely sail in the ocean of huge profits. Because of rental income, you will receive a return on investment faster. And the best benefit is you can significantly raise the rent from time to time as compared to a residential structure. Moreover, if you wish to boost your ROI, you can always add amenities that play an important role when someone is looking for accommodation. If you are low on cash, you can perform the last moment renovations by receiving a direct deposit payday loan.
2. Involves less risk
Another perk one enjoys when Investing in a commercial property is that it is less volatile. You also have the liberty to secure the long term lease contracts from your clients. It can long from 3 to 5 years and sometimes even longer than this. If you do this, you ensure that you enjoy profit for the upcoming half decade even if the market fluctuates for whatever reason. No economic swings will be able to disturb your budget.
3. Tax Incentives
When thinking about investing in a commercial property, one cannot deny that commercial property is sometimes an expensive task. Internal Revenue Services recognises this, so that is the reason why they are given tax incentives on expenses to maintain and upkeep the property.
4. Less Competition
Residential property investment is highly competitive. The structure is bigger, making your competitors less involved in commercial property. The sector offers a great variety of establishments that can be considered niches. When your niche is particular, you will have less competition and more brilliant clients.
5.Increased value over time
The success mantra behind the real estate industry is to make sure that the property you possess appreciates over time. It becomes quite difficult if you don't have much space in residential property, but commercial real estate is extremely different. When thinking about making a profit while investing in a commercial property, you can always add new amenities in order to attract potential clients. If your location is well secured, then tenants will thrive to choose your property which makes investors fight even more over your property when you decide to sell in the future.
Key points investors should keep in mind when investing in commercial property.
It's good to enjoy the benefits that come when investing in commercial properties, but it's better and wiser to be smart and not let any negligence break your deal or profit. So following are the crucial key points that every investor should look for when investing in commercial real estate.
Health and wellness factors
Especially after the outbreak of COVID-19, occupiers are more careful than ever and focus entirely on the importance of health and wellness aspects. So investors should focus on acquiring properties that have sustainable building parameters in order to gain an advantage.
Documents containing information like names, titles, approvals, bills etc., should be thoroughly scrutinised by legal authorities as part of due diligence. This is the time when no investor can show negligence.
Quality of the commercial property
It will be a plus point if your property has accessibility through roads and connectivity to the nearby social and physical infrastructure. Commercial property should be constructed as per norms and should be thoroughly maintained.
Potential of ROI
Being an investor, it is mandatory for you to make sure that you invest your capital in emerging markets with a high appreciation potential as well as maximum growth on ROI. If you are investing in the office, you should focus on its location and tenancy and flexible workspaces. If you are investing in a mall, make sure you have the right mix of products considering the size of the mall to get better returns.
We know the fact that investing in commercial properties is a huge undertaking, but the profits it offers cannot be sidelined. Not only does investing in commercial real estate involve fewer risks but also high ROI. If you take well care of your property and follow some tips and tricks, you can easily triple the value. We wish you the very best for your commercial real estate investment and bid you good luck and good fortune!