Commercial real estate investment is very rewarding both financially and personally. We all make an investment for future profit and security and commercial real estate is witnessing steady demand and increase in prices.
Some people also make an investment in commercial real estate for the sake of tax benefits and portfolio diversification. In case you are a first-time investor then you will be amazed to know that commercial real estate investing offers an array of opportunities. Therefore, there are several ways where investors can take part in the commercial real estate market.
But before making any kind of investment, it is very important to know the types of commercial properties. Commercial property offers a broad range of purposes, but usually, they are grouped into the following types:
Investors have many choices in terms of investment in commercial real estate. When investing in real estate, all the investors have one ultimate aim in their mind which is either generating rental income or have an appreciation in the commercial property resale value.
Below are some commercial investment opportunities based on the investment primary
purpose: Income or Appreciation opportunities.
Today, all the multinational offices have established their offices in India, primarily in major cities such as Gurgaon and Delhi-NCR. And because of the world-class offices in the prime locations, all the domestic companies also choosing to find their offices. With time and demand, all the high-quality facilities will become the necessity for all types of companies irrespective of being small or big in number.
The price of office building mainly depends on the capitalization rate, which indicates the rate of return means the net operating income. With the presence of major international real estate funds in India, there is a huge flow of private equity money into the high-quality rental space. Also, a huge number of commercial space developers have a good relationship with one or such funds.
Today, India’s retail sector, as a whole is booming. There are good quality commercial investment opportunities in this sector. Many developers have built malls and investors in Indian malls are very optimistic because of the good growth of consumption.
In India, hotel buildings are owned by real estate investment firms while the management work is done by a hotel company. Therefore, the operating value and the asset value (both building and land) is divided between both the parties with an equal share of profit. Hotel ventures are very attractive investments as a well-chosen hospitality property can be a quite good investment with a high-quality long-term return.
Since investment in offices is considered as an income-producing asset, offices under construction is also an important approach to partake in the value created by developing the land.
In this method, at an early stage, the investors purchase an under construction property, in which they later exit the transaction once the property is rented. The final price will majorly depend on the capitalization rate at the time of resale. It is a very interesting investment option for a group of investors compared to individual investors because of the larger ticket size for such transactions.
However, in order to know how to make an investment, it mainly depends on the investment vehicle. Below are some of the ways how to make the investment in the commercial real estate:
In this case, being an investor you can buy the property in your own name and become the owner of the Commercial real estate property. If you have the investment to buy a property on your own then these types of investments present an appreciable commercial investment opportunity which results in both appreciation and steady income.
Although, keeping in mind the high cost, buying a commercial estate property completely, is not being practical. It needs a lot of efforts. Also, these types of ownership have the burden of maintenance and leasing risk.
To resolve the issues with the direct purchase, some of the builders offered the option of virtual ownership. In this, you will not become the owner of the unit but of an unidentified space on a floor or a building. In such cases, builders take the responsibility of maintenance and leasing. This type of investment provides a stable return but have a vacancy risk and also, the risk of not having an identified space.
REIT is the real estate investment trust, is a company that owns various types of commercial real estate, ranging from an apartment building to office spaces to warehouse spaces and many more.
REIT will change the nature of investment in real estate, providing commercial investment opportunity by offering retail investors easy access to high-value properties that were previously reserved for large institutional investors. It offers stable yield flow and less execution, leasing and default risk.
In these cases, investments are made by many financial and wealth management fund houses in India. Here, real estate funds are similar to direct purchases, but in a scalable and institutionalized setup. The fund manager bets on land parcels, developers and cities, whereas unitholders have some part of the diversified pool of assets and investors get their return in the form of dividends and net asset value (NAV) appreciation thanks to capital value improvement.
These kinds of funds usually have a time period of 6-8 years with very difficult exit clauses in case investor wants to exit early.
In these cases, secured real estate debt is also a valid option in which debt is sold through fund houses and papers of builders generally have a higher price than G-sec yields. However, this type of investment is riskier by nature, but they do offer a notional cover of security.
There are many ways to invest in commercial real estate but now the question we all have in our mind is which option is the right one for you?
It mainly depends on the risk-reward expectation. Your final call should depend on the matrix of risk and return. However, we all want to assure return at the end, which is a very known concept in real estate.
Assured return means that there is an assured return on money invested by the investor at an agreed rate. It also has the concept of capital appreciation involved, which means there will be an increase in the value of the assets depending on the rise in market price.
In some cases, the rate of return is assured by the investor, decided by the developer and generally, it is fixed in advance and the investment is offered to the investors interested in the project. If you are looking for investment in the commercial project with advance assured return. Then
among all the option available, 83 metro street is the best option in the prime location of Gurgaon which provide you with the latest style office spaces with advance assured return on a commercial project.
83 metro street project is spread over 4.20 Acres with world-class amenities and facilities.
There are several types of commercial investment opportunities in 83 metro street such as office spaces, multiplex, corporate suites, virtual space and retail shops with advance assured return on commercial projects. Investing in 83 metro street will also be an ideal commercial investment opportunity.
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