Commercial real estate: A smart choice for today’s smart investors
Investment and real estate are the first thoughts that come to mind for Indian customers. This is because this market area is often seen as a safe choice for investing. But, commercial real estate has gained popularity over time. And, investors are now increasingly eager to invest in commercial real estate.
But, firstly what exactly is commercial real estate?
To begin, let’s define commercial real estate. In layman’s terms, commercial property is any property that is not classified as residential property. These assets include naming a few, offices, buildings, shopping malls, hotels, and factories. Residential property is used by a single person, whereas commercial property is utilized by several people. Whether we are talking about commercial property for investment or sale, the decision is always advantageous. But, an investor should always use extreme caution when investing in real estate.
Commercial real estate: A Smart investment option
Commercial real estate (CRE), an important component of the real estate market, often consists of commercial, retail, and office properties. Back in 2020, the pandemic had a tremendous influence on the real estate market, particularly the commercial component. It was, however, resilient in its approach and therefore swiftly embarked on the path to recovery. The market is already expanding rapidly, and according to Mordor Intelligence, the Indian commercial real estate industry would increase at a CAGR of 13% from 2022 to 2027. Investment in commercial real estate is increasing in tandem with this expansion. According to KPMG, the resumption of business normality and the growth in flexible spaces, along with technology improvements, will especially boost this trend. Aside from this, the Shop Cum Offices idea and the Deen Dayal Awas Yojana are driving investors to invest in commercial areas.
Shop cum Offices (SCOs): A trending commercial real estate concept
The Haryana government is behind the Shop Cum Offices (SCO) idea. This style combines commercial real estate and office space in the same building, particularly in excellent locations. They are freehold plots with basic infrastructure that may be constructed and customized according to the needs of the investors. The land is completely owned by the owner. Banks, healthcare centers, retail stores, cloud kitchens, dining establishments, and other properties are located on the bottom floor, while offices are located on the top floors. Such properties see a lot of traffic. In addition, capital appreciation is ideal, the stream of lease revenues is consistent, and the risk levels are low. As a result, investing in such areas benefits both developers and investors.
It is the most recent trend that is propelling the commercial real estate sector. The Haryana government’s commercially planned colony strategy is critical in propelling the SCO segment. Encouraged by this initiative, developers are marketing this notion as a real estate asset, notably in Gurgaon and Faridabad. SCOs are becoming a popular asset type for investors looking to diversify their portfolios. This category is attracting the attention of commercial real estate investors due to its numerous benefits and ability to combine retail and office space.
Initiatives by the government
- Deen Dayal Jan Awas Yojana, an affordable housing project
The Haryana state government started the Deen Dayal Jan Awas Yojana, an affordable housing project, in November 2016. It is an effort aimed at encouraging the building of high-density planned communities in Haryana’s medium and low-potential cities. The goal is to reach the ‘Housing for All’ aim by 2022. Private developers are building inexpensive housing colonies under the direction of the state government.
They are being developed in a desirable position since the region is well connected to Delhi through NH8, SPR, and Sohna Road. Cybercity, Golf Course, Sohna, as well as hospitals, hotels, retail outlets, educational institutions, and so on, are all nearby. While the colonies are being built, additional facilities such as a gym, café, snooker room, yoga deck, sports area, restaurant, and so on are being built. This is just another explanation of why commercial real estate is thriving and investors are eager to participate in this strategy.
- Southern Peripheral Road: boosting commercial real estate developments
Another major example of the commercial real estate segment being a feasible investment opportunity is the fact that the Southern Peripheral Road (SPR) is attracting investors’ interest. This 845.5 crore initiative is anticipated to revolutionize the real estate market. The main reason is that it will connect Golf Course Extension Road, NH-8, and Sohna Road. Furthermore, different commercial real estate projects such as IT parks, retail malls, stores cum offices, and so on are being built. When finished, it will not only promote the real estate sector but also serve as a preferred investment location for investors. According to the ANAROCK study, SPR will have a total availability of 3500 units by Q2 2022. 2900 of these are currently under development. The project has acquired funding and clearance for reconstruction, which is projected to be finished by 2025. This investment announcement is not only causing a stir in the real estate business, but it is also drawing substantial funding for the project.
Commercial real estate properties have an advantage when it comes to investing in today’s times for a variety of reasons. The key advantages of investing in commercial real estate include higher yearly rental appreciation, lifetime asset value, and a rise in demand resulting in a larger long-term return. The Shop Cum Offices concept is gaining traction with investors, owing to the development of hybrid work practices. Furthermore, the Southern Peripheral Road and the Deen Dayal Jan Awas Yojana plan are promoting commercial real estate investments. Commercial real estate is progressively developing as an attractive investment source as a result of these factors!
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Commercial real estate: A smart choice for today’s smart investors FAQs
When compared to other property kinds, commercial real estate gives exceptional appreciation over a longer length of time. Investing in a quality commercial property via REITs or fractional ownership may also deliver great profits with a much smaller and more manageable cost.
An investment in commercial real estate often requires a substantial sum of money that no single retail investor can offer. Real estate investment trusts (REITs) and fractional ownership are the two most frequent ways to invest in commercial real estate (CRE).