Commercial Real Estate Investment In India
Commercial Real Estate is a property that provides a workspace rather than a living space. Getting started with Commercial Real Estate.
In the current equity markets , when the markets are inflated then people tend to think that the good times will continue forever. However, all markets have market cycles. It is the right time to invest in Private Commercial Real Estate today because of these reasons.
- The limited space in India for grade A development has led to a lot of future projects catering specifically towards MNCs who want their business graded with the top status. Today, there is strong demand regardless Covid, the demand is very strong. So the vacancy is also very low.
- The demographic of India is very favorable, which means that the population below 25 years old will soon make up a majority. Due to this trend urbanization rates have increased and commercial real estate has become an even more attractive investment for companies. In a lot of developed countries, work from home culture has worked and that's because the employee base was already trained. Because India is quieter than most other places in terms of population density , living arrangements are different for people who live there . .So this is why even during covid times, commercial real estate is still one of the very stable and outperforming asset classes relative to the others.
- During Covid, Most fixed income, debt,, and FD products have dropped to 5-6%. Commercial real estate is still stable because the rental is 8-10%. You get hard underlying asset, and most importantly, you have lease agreements with MNC tenants, which is sufficient to get one past this covid phase.
With India's Commercial Real Estate market seeing rapid growth, it is the right time to invest in this asset class now. The largest funds of world have their maximum allocation allocated towards Indian properties like Brookfields and Blackstones due its high yields overtime. This is the right time to invest in commercial real estate because when you invest in a matured market then your yields are lower. To participate in India’s growth and to benefit from the upside, Now would be the time to invest. As there is a perfect balance of stability and returns.
The two ways to invest in Commercial Real Estate are through fractional platforms or by purchasing the property yourself. The best places to buy Commercial Real Estate in India are Mumbai, Delhi NCR (National Capital Region), Hyderabad, and Bangalore.
Commercial Real Estate Investments have been on the rise for a while now. Lenders are more willing to fund commercial properties since they tend to be less risky than residential projects, and there's an increasing demand from business owners who need office space or warehouse facilities.
Return profile of residential and Commercial Real estate
Commercial Real Estate is more lucrative when it comes to earning rental yields. Investors are able to earn 8-10% in commercial properties, whereas the rate of return for residential property investment falls between 2-3%. The best Commercial Real Estate investment in a highly desirable neighborhood is a great long-term holding
The barriers to Commercial Real Estate -Investors perspective
- The limited space in India for grade A development has led to a lot of future projects catering specifically towards MNCs who want their business graded with the top status. Today, there is strong demand regardless Covid, the demand is very strong. So the vacancy is also very low.
- The real estate market is an induced product. The developers put a lot of marketing to sell the properties and customers can easily get information about it, however, in Commercial Real Estate investing; you are reliant on relationships because that's where opportunities lie. This is where WiseX comes into the picture!
Commercial Real Estate Investments have been on the rise for a while now. Lenders are more willing to fund commercial properties since they tend to be less risky than residential projects, and there's an increasing demand from business owners who need office space or warehouse facilities.
Why should one invest in a CRE
In today's economy, there are businesses that have been shut down. In the same light, equity markets continue to boom and make good returns on investment for their investors. This is a sign of bubble-like behavior in which people tend to invest money with great risk in hopes of getting high rewards.
Historically, when inflation is high and returns in the equity market are low people prefer to diversify their investments by investing some of them into real estate. Commercial Real Estate investing provides a hedge against inflation because it gives steady rental income which helps offset any loss you might have had if your investment was solely in equities or other asset classes during this period.
There is no wealth product that gives you monthly cash flow like real estate. Rentals are paid off every month in this industry, and investors can make a decent amount of money from these investments if they do not sell their property too soon or hold on to it for long periods of time after purchase.
The best way to invest in Commercial Real Estate is by holding a long-term lease. The yields are very competitive with 8-10% only from the rental income. This is almost double that of FD rates.
Why WiseX?
- WiseX takes care of everything end to end, and one can complete the process in 15-20 minutes with digital support. This is similar to how all other investment classes, including equity and debt, work online today.
- In the past, the adoption of technology in Commercial Real Estate has been slow. However now with fractional ownership platforms like WiseX, there is a huge increase from investors by eroding barriers to entry and allowing anyone to participate without investing large sums upfront. This allows users on the WiseX platform to access curated A-plus grade managed properties through their dedicated managers who they can reach at any time during or after the investment process if needed
