Tag Archives: commercial property

Investment in Commercial Property

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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. 

Loan for Commercial Property

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If you need money, your commercial property could be worth a lot to you as credit. You could use it as security to obtain a loan for commercial real estate. Find out more about this credit by reading this blog. 

What is a loan for commercial property? 

You can get money by using commercial real estate you already own as security through a financial product called a commercial property loan. It is an option to increase the amount of capital available for business growth or purchase new equipment. 

Typically, you can get a loan for up to 60-70% of the value of your property. Additionally, this credit option has enticing interest rates and no restrictions on final use. The application process is fast and hassle-free. To meet the particular requirements of each business, some lenders also offer tailored loan solutions. 

Qualification Standards for Commercial Property Loans 

There is a financial product available for independent contractors. They fall into the following categories: 

Types Examples 
Independent Professionals Chartered accountants, architects, company secretaries, lawyers, medical professionals, and consultants 
Non-professional Self-Employed (SENP)Traders, Manufacturers, Commission Agents, Contactors, etc. 

The requirements for qualifying for a loan against commercial property will differ between loan providers. However, a few of the typical ones are listed below: 

Residency Indian 
Age Minimum 25 years to Maximum 75 years (when the loan matures) 
Income Some lenders evaluate the business and fund it without needing proof of income. The applicant must have a reliable source of income; it must demonstrate this by submitting pertinent income documentation. 

As a result, before requesting the loan, you and the co-applicant (if any) must confirm that these conditions are satisfied. 

Required Documentation for a Commercial Property Loan 

In the same way, the eligibility criteria will vary among lenders, and the documents required to apply for a loan against commercial property will also differ. Before starting the application process, you should note them. 

Below is a list of some of the general ones: 

  • Address and Identity Verification: A passport, Aadhaar card, voter ID, PAN card, driver’s license, or any other government-issued document that meets the criteria for KYC. 
  • Income Evidence: Account statements for savings and current accounts, copies of ITRs with CA attestations, computations of personal and business income, balance sheets, and P&L statements for the last three years
  • Property Records: Copies of all relevant documents about your commercial property, including the buyer agreement, title deeds, prior chain of title (in the event of a resale), and any other relevant documents. 
  • Other crucial documents include passport-sized photos of the applicants and any co-applicants, checks to pay processing fees to the loan provider, business profiles, partnership deeds, etc.  

How to Submit an Application for a Commercial Property Loan

You can apply for a commercial property loan online by following the instructions below: 

Step 1: Access the website of your preferred lender. 

Step 2: Visit the section for loan applicants. 

Step 3: Provide the information as prompted. 

Step 4: Apply. 

You can apply offline by visiting the bank or agent. Once your application process is complete, a representative from the lender’s end will contact you to process and approve your loan application. 

Final Remarks 

A commercial property loan can be a great way to build credit and meet your company’s financial needs. 

Commercial vs. Residential Property

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Real estate has long been regarded as a trustworthy investment because it enables people to amass wealth and generate passive income. Commercial and residential real estate investing are the two primary market segments. 

What is Commercial Property? 

In India, properties utilized for commercial purposes are commercial property. It includes workplaces, shops, hotels, warehouses, and other commercial and industrial structures. In India, businesses frequently lease or rent commercial properties, generating income from rental payments. Location, rental yield, infrastructure development, and general market conditions are just a few examples of the variables that affect the value of commercial real estate. 

What is Residential Property?

In India, residential property refers to properties used mainly as residences. It covers single-family homes, condominiums, townhomes, and gated communities. Individuals or families purchase residential properties in India for their use to rent. Location, amenities, connectivity, demand-supply dynamics, and property condition are just a few of the elements that affect residential real estate value.

Rental Income for Commercial vs. Residential Property

When contemplating investing in real estate, rental income is a crucial factor. Property buyers are frequently perplexed over whether investing in a residential or commercial property would yield a higher return on their money. Senior real estate expert Arvind Nandan notes that the general asset selection principles, such as the property’s location, quality of construction, age, and usage, are the same whether the property is residential or commercial. “Remember a few things when you consider investing in terms of the expected rental income for residential versus commercial property. Commercial properties have longer lease terms than residential properties, which typically require annual leases. Due to the frequent tenant turnover, vacancy risks are higher in residential properties. Property buyers should, therefore, consider the qualitative aspects of these two segments before deciding between leasing commercial or residential property, the expert advises. 

Commercial vs. Residential Properties: Rewards vs. Risk 

Tax Advantages: Rental income from commercial and residential properties is subject to taxation. However, under Sections 24 and 80C of the Income-Tax Act, real estate acquired with a home loan is eligible for tax breaks. 

Because residential properties experience frequent tenant turnover, higher maintenance and upkeep expenses, and lower returns, risk and volatility may be higher in residential properties. Commercial real estate provides reliable, long-term renters with steady income streams. 

Both entering and leaving an investment aren’t with illiquid assets. A portfolio of commercial properties would be easier to create with Real Estate Investment Trust (REIT) regulations. Building a portfolio of commercial properties would be easier under Real Estate Investment Trust (REIT) regulations than acquiring residential ones. Additionally, because there is a much higher demand than supply for Grade A pre-leased assets, they are more liquid than residential properties. 

Before deciding whether to invest in residential or commercial property, it is crucial to factor in the location, investment amount, and tenure in addition to the above factors. 

Investment in Residential Property: Pros and Cons 

Benefits Drawbacks 
Cheaper Entry Fee. Low rental income and yields. 
There’s no minimum size available. Investment in furnishings to make it affordable to rent
Loan applications are widely available The lease will be of 36 months. 
Leasing procedures are typically much quicker. 
As compared to commercial properties, returns last for a short period. 

Investment in Commercial Properties: Pros and Cons 

Pros Cons 
Higher rental yield returns Commercial property capital values typically exhibit longer-term stability. 
Possible longer-term leases of up to nine yearsFor economic viability, the property might need to meet a minimum size. 
Leasing is available in either a bare or warm shell. Selling is challenging due to the absence of buyers as there could be. 
Commercial values are not very volatile. 

Prime Commercial Property for Sale in Noida: Best Property Deals

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Purchasing commercial real estate in Noida has grown in popularity recently for several reasons. More and more people are considering commercial investments in terms of potential capital growth and steady rental income. Since Noida is a commercial hub, many job seekers flock there, which increases residential investment. Due to their interdependence, commercial real estate demand has unavoidably increased. 

However, commercial projects must sit in a way that will encourage substantial business or investment growth. The place to invest in commercial real estate is in a well-planned city like Noida, renowned for its state-of-the-art infrastructure and superior connectivity. A wise choice is to invest in Noida commercial real estate. There are a few things to think about before making the choice. 

Noida is the center of commercial real estate investment. Everyone can commute easily because of the metro’s presence and the wide streets connecting this neighborhood to other areas of town. It is beneficial for networking when multinational corporations with significant corporate offices advertise their presence here. For those who live and work here, the city’s presence of shopping malls, restaurants, banks and ATMs, reputable healthcare facilities, and schools makes life simpler and more convenient. It is a bustling area with lots of traffic, making it a forward-thinking choice for a successful investment. 

Demand from the Market: Noida stands out as a densely populated area with a sizable residential component, which enhances the benefits of commercial real estate by increasing profits and reducing the likelihood of vacancy. A large catchment area ensures high rent and capital returns because such locations generate demand for commercial or retail setups. 

Maintenance must be a practical cost-cutting measure when purchasing a commercial property.  

High maintenance costs could deter investment. 

Real estate is one of the safest and most effective investments. It is an investment type whose prices don’t change daily, making it a largely dependable means of funding. Land, houses, and commercial buildings are the three main kinds of property in the highest and most steady demand. These three investment categories all guarantee a return on your money. 

Commercial property

Commercial real estate is experiencing rapid growth in demand. Corporations, stores, and offices are all based on this kind of commercial real estate. Commercial real estate is anything not used for residential purposes and serves businesses. Real estate is owned for commercial purposes in any property, to put it simply. 

Types of commercial real estate

  • Office Space: Office space is also in high demand because it can house multiple tenants. Given its location and style, the property might rent to many people. Typically, it is easy to find tenants for office space. 
  • Multiple families: Multifamily real estate is known as real estate that has multiple residential units. The simplest way to turn this into commercial income is to rent the apartments. It is the easiest next step for investors looking to enter the office real estate market. The main advantage of owning and renting multifamily real estate is the multiple income streams from the various families residing in the residential units found on it. 

Further subcategories of multifamily real estate include duplex/triplex/quadplex, mid-rise, high-rise, and apartment buildings, as well as senior housing and assisted living facilities.  

  • Hospitality: Tourists and those seeking relaxation make up the majority of the clients for hospitality real estate. Accommodations in this category include hotels, resorts, theme parks, and bed-and-breakfasts. Hospitality real estate includes but is not limited to, low-cost hotels, extended-stay hotels, full-service hotels, limited-service hotels, short-term rentals, etc. 
  • Retail: Real estate shops that deal in business-to-consumer (B2C) sales of goods and services. For the benefit of the clients, these properties sit in the heart of the town. Buildings like neighborhood shopping centers, regional malls, neighborhood retail centers, and power centers are examples of retail real estate. 
  • Industrial: Real estate has grown significantly over the previous economic cycle and is relatively easy for investors due to its low entry cost and flexibility. Commercial production and manufacturing facilities, among other industrial activities, are based in industrial areas. Cold storage, showrooms, heavy manufacturing, light assembly, bulk warehouses, and flexible warehouses are a few of the different types of industrial real estate. 

If you are interested in purchasing a commercial property for sale in Noida, then Propertywala can help you out, as we have 367 commercial properties for sale in Noida in the range of Rs. 2.5 lakhs to Rs. 18 crores. We can help you find commercial properties for sale in Noida in popular areas like Sector 62, Sector 140 A, and Sector 75. 

Commercial properties for sale in Noida

Sector 62 is the best commercial property in Noida. The amenities and services that ITHUMS 62 offers are unmatched by any other property. It is an excellent location. Within a 2-kilometer radius, there are good hospitals, restaurants, markets, ATMs, banks, and offices nearby. Noida’s Sector 62 is a prime location for corporate offices, as it is the center for business in related industries like banking, entertainment, and education. It also has the best connectivity to Greater Noida and Ghaziabad via the Delhi-Meerut Expressway, FNG, and other wide roads.

Sector 62 serves as the center of the IT and ITeS sectors, along with other related service industries, making it more than just a sector in Noida. The fact that it serves as the hub for numerous educational institutions, such as playschools, high schools, and institutions of engineering and management, is also well known. It even has a Noida center at IIM Lucknow. 

The city center of Noida and all other areas are close to Sector-62. It lies early near Indirapuram and is well-connected to Delhi via the DND and NH24. Additionally, work on extending the Metro to Sector-62 will soon begin as all necessary approvals have arrived. 

Institutional businesses dominate Sector 62. Sector-62 is even more exclusive because of the limited residential areas that are present there. 

Can a residential real estate agent sell commercial property?

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Commercial and residential real estate brokers come from the same industry. The simple fact that both agents work in real estate is the only obvious similarity. The property type that each individual specializes in becomes the defining characteristic. Residential real estate agents assist clients with buying, selling, and renting property for their use. 

On the other hand, commercial property agents handle real estate used for business or investment purposes. These agents advise investors on risk issues and ensure they get an ROI when they buy and sell real estate. They also lease properties, locate new spaces for their assets, and locate new areas for their client’s businesses.

Now, we have to consider several factors to elaborate on other differences. What skill sets do they possess first, for instance? What kind of transactions do they handle, what sort of property do they deal with, etc.?

Properties’ nature

One of the vital factors is the type of property. It covers topics like the number of housing units, the kind of building, the size, etc. You might need a commercial property agent when you want to buy or sell a property with more than four properties. Such transactions require commercial real estate loans, with stringent requirements and technicalities that may be challenging for a residential agent to complete. On the other hand, residential agents can complete transactions that do not require extensive 

residential agents to complete. On the other hand, residential agents can complete transactions that do not require extensive commercial knowledge. 

Skillset

Let’s start with the most fundamental factor in deciding if a residential agent can sell commercial property. Both residential and commercial agents must have specific skills to sell a property. Agents are expected to have perseverance, bravery, and strong communication skills. However, selling commercial properties necessitates a thorough knowledge of economic principles. Commercial agents work with properties that require them to understand concepts that residential agents might become familiar with, such as gross rent multiplier, cap rate, internal rate return, etc. However, commercial transactions may be made when residential agents are skilled in aspects of commercial property. Consider a residential agent with extensive knowledge of rent rolls, caps, and internal rates. They’re in a position to conduct business thanks to these skill sets. 

Partnership 

A residential real estate agent can sell commercial property by collaborating with a commercial agent. In addition to helping the client get the best rates, working with a commercial agent offers independent analysis. 

Databases create an issue for qualified residential agents. Most commercial businesses maintain a database of available lease spaces. A residential agent may not, thus, have access to these “private” lease spaces. 

Conclusion 

Agents who specialize in residential sales may also be able to sell commercial properties in some circumstances. Nevertheless, depending on the type of property you are dealing with, it is advisable to select a knowledgeable agent. Choose a residential agent if the property is for personal use; commercial agents are better suited for dealing with commercial real estate. Working with an expert gives you value for money and service. 

DLF gains profit much after Goldman Sachs upgrade

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Reuters Market Eye – India’s biggest real estate developer DLF (DLF.NS) rose 3.2 percent to 188.10 rupees after Goldman Sachs upgraded its rating on the stock to “buy” from “neutral” and raised its 12-month target price to 264 rupees from 252 rupees.

Goldman cited a pickup in residential launches, a recovery in commercial property, easing interest rates, and improved outlooks for asset sales as well as for operating/financial leverage as reasons for upgrade.

DLF’s share price is down 0.5 percent for 2012 while the BSE Sensex is up about 11 percent in the same period.

The upgrade has come close on the heels of DLF’s removal from the Sensex, which will come into effect from June 11.