Commercial Property & Office spaces - Invest in Commercial Real Estate

What are the best commercial real estate markets? Going forward, commercial properties will be among India’s most powerful economic engines, pushing urban developments into the far corners of India.

Investors with in-depth real estate knowledge have diverted their interest towards commercial real estate as they know an excellent commercial property can yield greater returns in both the short and long term. The coming up of REIT and increasing requirements from the new employment generation has further pushed the demand. Any plan the government announces to this sector will affect the economy. Thus, these ever-changing trends drive an investor’s strategy to stay ahead of the competition. In order to know the current and upcoming commercial real estate trends, it’s significant to review trends that brought us here today. One such major factor for the growth of real estate is the initiative undertaken by our Prime Minister in boosting the Smart City mission.

If we look at the present data, the rental benefits from commercial properties are between 5% and 12% whereas, in the case of residential properties, it is currently around 2%-4%. While we have seen the residential segment been struggling, the office segment has been recovering soon.

Commercial properties in the right location attract high-profile corporate tenants that can offer good rental returns. The IT sector and InfoTech companies in order to rationalize their spending, are moving towards smaller cities to avoid the expansive rental in major cities. Such developments have led to the expansion of commercial assets in smaller cities, and the trend is likely to pick up the pace in the future.

Price appreciation is one of the key factors that people invest in real estate. Rental yields have always been attractive in commercial real estate and experts believe that the sector is likely to be a good investment option. Offices, warehouses, data centers are some of the segments of commercial real estate. These units are graded based on their location and the host of amenities. In the past few years, the sector has been doing well with Grade A offices almost touching a net absorption of 46.5 million square feet (sq. ft). The office segment has been a popular choice amongst institutional investors. Even with the onset of a pandemic, the office segment has seen as high as $3.1 billion investments in 2020 as compared to $2.8 billion investments in 2019, surveyed by an India Real Estate Outlook.

Looking at the present market scenario, a few prominent upcoming investment locations can be Noida, Gurgaon, Pune, Kolkata, Hyderabad, and Mohali. Demand for suitable quality office spaces and commercial spaces is foreseen in the future as many big firms are moving to these cities.