March 20, 2010

You need to give a second thought if you believe that commercial properties are purchased only by companies to aggrandize their business plans. Forthwith, money is put into commercial properties by High Net worth Individuals (HNIs) too.

In the past, the New Age Indians were just confined to investing in residential properties, but it does not goes for now-a-days. The trend is growing fast. According to the CMD of PropEquity, Samir Jasuja ,a large no. of HNIs will look ahead to buy commercial properties if banks do not show aversion to giving loans to individuals in order to invest in commercial properties. He added “the fact that banks do not show any positive response to sanction loans to individuals in order to purchase commercial properties is not a secret anymore. The status is same all over the world. That is why you cannot compel only our banks.”

The reason behind banks avoiding loans disbursal to individuals in investing in commercial properties is that the rate of default is very high in this segment as compared to residential properties. Thus, banks joyfully give loans for residential properties while they are not that interested when it comes to loans for the investment in commercial properties.

The director of Century 21 India, Anu Gupta suggested that HNIs should make investments in commercial properties as investing in them could prove to be highly beneficial as far as their return is concerned. The underlying reason would be that while they could go for bank loans up to 75-80 % for such purchases, the compensation of such loans could be set off against the rental incomes from such commercial properties. Therefore, as the retail/commercial industry grows, by investing a portion of the full price, an investor can gain a high-value asset, which will not only give maximum return (thanks to the set off provision in IT against rentals), but could see a significant appreciation over a period too.