The real estate sector is one of the most popular avenues for investment. It is divided into two arenas, namely commercial real estate and residential real estate. While commercial real estate entails retail buildings, office buildings, industrial establishments and warehouses, residential real estate deals with residential properties such as housing societies, luxury apartments and flats among other things.
The commercial sector is an interesting prospect for investors who are looking forward to maximum returns, passive income, and potential for growth. Although, all of this is only possible if the investment is a smart one and well thought of. KCT Group, with Varun Thapar at the helm, have been developing commercial properties across the country that have been extremely beneficial for real estate investors. There are certain elements that you need to figure out and verify before you put in your hard earned money into the property. Indian city properties that you might be looking at need to be surveyed in terms of their location, the demand in the area, future growth and the market condition of the place.
To help you pay heed to the essential points, we have listed down the factors that you should consider before the investment.
Location: Location is one of the prime variables for any property. The returns from commercial properties come through two avenues – rent and capital appreciation. Both these avenues are highly dependent on the location of the property. It is best to look for properties that have a vacancy less than 5%. This will ensure that the residents are likely to stay around which in turn would result in higher rent and capital appreciation.
Demand and Supply: This is one of the first steps taken by a savy investor in the analysis of a property. Every city has its own micro market with different trends ruling the commercial space. Mumbai has areas such as Nariman Point, Parel and BKC while Bangalore has Electronic City, Whitefield and ORR. Each of these markets have their own stock and upcoming supply of projects. If the annual supply of the next 2-3 years exceeds the demand history in the area, it is likely that the rent in the areas are going to shoot up.
Tenant: Who and how the tenants of the area are can have a lasting impact on the property and its value. It is best to look for bluechip multinational tenants rather than small scale companies. Having a good and reliable tenant ensures timely payment of rent, higher deposits, rise in the value of the property and longer stays.
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