The untapped potential of India’s commercial real estate – Construction Week Online India

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India’s real estate sector is a dynamic landscape with distinct segments catering to different needs and preferences. Among the key divisions are commercial and residential real estate, each presents unique challenges and opportunities. India’s commercial and residential real estate markets play pivotal roles in the country’s economic landscape. While commercial real estate thrives on the growth of businesses and technological advancements, residential real estate remains deeply connected to demographic trends and government policies promoting housing for all income groups. Understanding the nuances of each sector is crucial for investors, developers, and policymakers seeking to navigate and contribute to the diverse Indian real estate market.

Today, India’s commercial real estate market has proved itself to be anybody’s game, giving investors of all investment sizes, of all ages a playground to convert savings into working monetary gains.

Buy/sell, rent/lease residential &
commercials real estate properties.

Business owners too now prefer to buy commercial real estate to secure a permanent location for their operations. This decision could be driven by the need for expansion, long-term cost savings compared to leasing, or the desire for greater control over the property.

Commercial real estate in India, also attracts investment for 3 major reasons:  

Income potential due to ROI: Commercial properties tend to yield higher rental incomes and today if chosen the right property size, need comparatively lesser initial investments. Moreover, commercial real estate requires lesser maintenance costs which prove to be a relatively hassle-free investment than residential properties. Residential properties, on the other hand, are often considered more stable and suitable for long-term investments or self-use, but require larger investment and also yield higher maintenance costs over the years.

Appreciation guarantee: This is a green flag for buyers with the eye for commercial properties, located in strategic areas with potential for growth and development, those may experience exponential appreciation in value over time. Investors look for properties in locations where infrastructure improvements, economic development, or shifts in demographics are likely to positively impact property values.

The location of a commercial property is a critical factor. Properties situated in prime business districts, areas with high foot traffic, or regions experiencing economic growth are often more attractive to investors due to their potential for higher rental income and property appreciation.

Control & asset collection: Buying commercial real estate is not just an Investors game, Business Owners of all sizes now also see it as long-term asset generation for their company, as well as to have control over their workspace that gives them long term ease of doing business in one dedicated space – which saves them the hassle of moving when their agreement is terminated with the land lord.

This factor also gives businesses owning commercial real estate a level of control and customization that leasing does not. Business owners can design and modify the property to meet their specific requirements.

Secondly, I personally have seen a trend between business owners today, as they choose to buy commercial office spaces to also gain Tax incentives and benefits are often available only for commercial real estate in light of Loan offers from banking institutions. Example, Depreciation allowances, interest deductions, and other tax benefits can significantly enhance the overall return on investment, especially when monthly rental outgoing is converted into, rather exchanged with monthly mortgage payments made to the bank, with the added benefit of the office space ownership.

With the inclusion of policies like the IT-ITES 2015 policy by the Maharashtra government pushing technological advancements & IT heavy businesses, giving both developers and investors/business owners incentives to cultivate a growth-oriented space. And even the Introduction of RERA, giving property buyers legal safety and ease of purchase, buying property has become a realisable dream for the average Joe.

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