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Importance of Location in commercial property Investments india
- Heading into 2024 and beyond, commercial property has emerged as a leading contender for savvy investors looking to dip their feet into real estate investments. And for good reason:
- As per Mordor Intelligence, the size of the India commercial property market is projected to be USD 40.71 billion in 2024 and grow at a compound annual growth rate (CAGR) of 21.10% to reach USD 106.05 billion by 2029.
- And when it comes to investing in commercial property, India showed a 33% Year on Year (YoY) growth in office leasing activities, as per Knight Frank. This was led by Bangalore, Mumbai, and New Delhi.
Understanding commercial property
- Before we talk about why commercial property is important, let’s see what all commercial property comprises: Commercial properties include office spaces, retail units, industrial buildings, and more.
- The potential to generate rental income, capital appreciation, and diversification benefits draw investors towards these assets.
Why commercial property?
- Investors today are pivoting towards commercial property investments over residential properties. Commercial assets provide the potential for attractive returns and have a tendency to generate higher rental yields – their main distinguishing feature from residential properties. Thus, they are an appealing choice to those seeking stable and regular cash flows.
- Secondly, commercial property investments typically have longer lease terms, there. This way you get a rental income stream for longer. Add to that heavy potential for capital appreciation, and you have a solid return on investment. But there’s a catch: The key to taking advantage of these opportunities all lies in selecting the right location.
The Key to Commercial Properties Location
- In commercial property, “location” isn’t just a buzzword. it stands out as the pivotal element that can determine the success or failure of your investment. A prime location not only augments marketability and can draw high-calibre tenants but also fuels long-term value appreciation; thus underlining its critical significance in this field.
- Ensuring the success of a commercial property investment hinges on strategic locations. The property’s desirability can undergo significant impact due to its proximity to business districts, smart hubs, transportation hubs and warehousing amenities.
How to Identify Booming Locations
Ten of 17 cities have been found to have exceptionally high potential for growth in the near future, according to a report by CREDAI and Cushman & Wakefield. Bengaluru, Hyderabad, Pune, Lucknow, Kochi, and Thiruvananthapuram are some of these.
In some cities, growth is driven through the domestic market. In others, IT, trade & service, startups and local businesses, and so on are driving economic growth.
To identify locations with high growth potential, investors must conduct thorough research, or opt for industry consultants or commercial realty investment firms (like Assetmonk) to do it for them. Consider the following key factors:
Economic Indicators
Assess the region’s economic indicators: GDP growth, employment rates, and business-friendly policies; specifically in emerging business hubs like Bangalore and Hyderabad – there is a surge in commercial property demand.
Development of Infrastructure
Vigilantly monitor infrastructure projects; they possess the potential to transform an area’s landscape. The progress of highways, airports, and metro lines not only lures businesses & companies but also increases property values, which is a good indicator of a country’s economic progress.
Demographic Trends
In analysing demographic trends, we have to understand the target audience for commercial spaces. Specifically, the focus must be on locations experiencing a growing population with a flourishing middle class. Such areas are likely to witness escalated property demand, with both retail and office spaces in heavy request.
Maximising Returns through Strategic Locations
Once you have circled in your location and decided on a commercial property investment strategy, there are some further actions to maximise returns. These include:
Tenant Quality
The focus should be on attracting reputable tenants with long term leases. This will lead to sustained rental income of which tenant quality is a key aspect.
Efficient Property Management
By implementing efficient property management practices for reducing vacancies and maintenance costs, you can attract quality tenants to your well-maintained properties – thus enhancing their long-term value.
Value Added Renovations
Consider strategic renovations or upgrades that can enhance the appeal and value of the property. Such value-adding measures attract high quality tenants and allow you to seek high rental rates. This is great for attracting businesses and companies who are seeking offices equipped with smart technologies and modern amenities.
Fractional Ownership of commercial property
Traditional real estate investments often require substantial capital, limiting access for many potential investors. Fractional ownership addresses this challenge by allowing investors to pool their resources and buy ownership stakes in a property.
By reducing the entry barrier, fractional ownership makes commercial property accessible to a broader investor base. Assetmonk has a minimum entry ticket of Rs 25 lakh, allowing investors to invest in commercial property without taking on the responsibility of sole ownership.
Bottom Line
Talking about commercial property, JLL India Real Estate Market report for Q3 forecasted significant office space absorption of approximately 45 million square feet in 2024, easily exceeding the benchmark set in 2023.
Looking forward, India’s commercial property sector paints a picture of potential and opportunity. With its fractional ownership model, Assetmonk invites investors to become active participants in this story rather than passive observers.
Assetmonk is leading the line in providing fractional ownership models for commercial properties; ushering in a new era in the dynamic real estate sector in India. The minimum entry ticket is set at 25 lakh rupees. This deliberate choice ensures that both seasoned and growing investors can partake in the benefits of commercial property ownership.
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