Investment in Commercial Property

Office buildings, shopping malls, warehouses, and industrial parks are just a few examples of the various property types that fall under the umbrella of commercial real estate. Even though residential real estate is what many people see, commercial real estate makes up a sizable portion of the market. 

You can make money by investing in commercial real estate, but you must understand the various types of properties and what to consider for each one. 

This article will examine market trends and investment opportunities for the real estate sector. We will also discuss the benefits of investing in commercial real estate. 

Recent Trends and Developments in Indian Commercial Real Estate

The Indian commercial real estate market has been the most impacted by the COVID-19 outbreak. The sector was already struggling because of the economic downturn, and the pandemic has only worsened things. The number of individuals looking for office and storage space had significantly decreased due to the lockdown. However, there are also some promising developments. 

India’s commercial real estate market has seen steady growth in recent years, driven by the country’s robust economic expansion, urbanization, rising disposable incomes, and an increasing number of expanding businesses. Due to this, commercial property prices have increased in India’s largest cities, including Mumbai, Delhi, and Bangalore. 

The government uses green building technologies to construct more energy-efficient and sustainable buildings. Environmentally friendly construction techniques will also be used by builders to reduce operating costs and draw mindful tenants. 

Once the government authorizes foreigners to make direct real estate investments, the demand for space in commercial buildings will rise. For investors and property owners, FDI may result in larger investments, more capital investments, and higher property values. 

Benefits of Indian Commercial Real Estate 

The country’s strong economy is helping India’s commercial real estate market grow and attract foreign investors. A serious concern is the need for more modern infrastructure, which could make it challenging to travel the country and conduct business. 

Generally speaking, commercial real estate in India has more benefits than drawbacks. 

  • Strong economic growth: The young population, expanding middle class, and reforms that make the nation more business-friendly add to the booming Indian economy. Strong demand for commercial real estate is a result of this growth. 
  • Cost-effective: Commercial property costs are increasing due to the high demand. They’re still reasonably priced, especially when compared to markets like Hong Kong or London. 
  • Favorable demographics: A key factor in India’s economic growth is the country’s sizable young population. The country’s middle class is also expanding, which increases demand for goods and services and expands business opportunities. 
  • Infrastructure development: India is progressing, even though there are still many issues with it. The Indian government is making significant investments in infrastructure growth, which may enhance the appeal of commercial real estate in some areas. 

Indian commercial real estate’s drawbacks 

India’s economy has grown at one of the fastest rates in the last ten years, and the same can be said for the country’s real estate market. Although commercial real estate in India has grown significantly, there are still some drawbacks that investors need to be aware of. 

  • Lack of transparency: India’s real estate market requires greater openness. Due to reliable data and information, it can be difficult for investors to make informed decisions. 
  • Costly: Commercial building construction and maintenance are expensive in India. Businesses struggle to establish operations in India as a result. 
  • Regulatory ambiguities: The regulatory climate in India is murky. Businesses find it challenging to long-term plan their operations as a result. 
  • Political unrest: India is a nation with a volatile political situation. The political unrest may make it challenging for businesses to run efficiently. 
  • Economic turbulence: Commercial real estate in India is subject to market fluctuations and can be affected by economic downturns, just like any other investment. 
  • Limited Liquidity: Due to the market’s lower liquidity than a few other markets, it can prove hard to sell commercial real estate in India quickly.

What justifies commercial real estate investment? 

There are advantages and disadvantages to owning both residential and commercial property. Depending on your financial objectives and how you intend to invest your money, one may be better for you than the other. 

Any inverter can profit and benefit from purchasing commercial real estate as an investment. Better returns and a diversified portfolio will be to your advantage. It will increase your passive income during this time. 

Commercial real estate can provide a variety of benefits that can help you meet your financial objectives, whether you are a novice or a seasoned investor. 

Income tax exemptions and deductions are available for commercial real estate investing. On the annual value (i.e., the annual rent collected on the property), investors can deduct a flat 30% of their expenses. 

Additionally, you may deduct up to INR 2 lakhs from your taxable income for interest paid via EMI under Section 24 of the Income Tax Act of 1962. 

An investment vehicle known as a REIT (Real Estate Investment Trust) enables people to invest in a diverse portfolio of commercial real estate properties. Investments in Commercial real estate REITs can be profitable, but buying and managing individual properties requires more money or managerial expertise.