Future of Indian commercial real estate properties in 2019

Transition in commercial property from the year 2018 to 2019! The investor seems to be making good profits, As the future of  Indian commercial property in India is scaling greater heights.

Summary:


The strength of the best commercial real estate project across India is improving due to the strong political stability and flexible stances in the monetary policy related decisions by the governments.


The current 2019 market trends are producing positive outcomes as the investor sentiments are high.


The instability of the financial market adds to it further.


Whatever be the situation, it is quite likely that both investors and tenants will join hands and come together in trying to bring in more flexibility in the circumstances which in turn will enhance their portfolios.


With strong political stability in place, the future of Indian commercial real estate sector investment is brighter than ever. There is no second thought that this is the right time to enter the sector as the markets will move on the upward curve from now.

However, investors will focus more on structural trends like modern logistics, data centers and commercial prospects which be more beneficial in the long run.


The Larger Picture:

India and China are the two pillars that contribute to the growth engines of Asia Pacific. The market sentiments of both countries are way different from each other.
In recent times, India has surpassed China as the world’s fastest-growing major economy.

Not only this, India has taken a step further and has successfully structured its own REIT market. That’s precisely is the reason why foreign investors get attracted to making investments in India.


future-of-commercial-property-in-India-in-2019
future of commercial property in India in 2019

On-going Reforms:

In the past few years, there has been a spate of reforms in the real estate sector. Right from the advent of RERA to GST, the implementation of overarching reforms has resulted in improved levels of transparency and accountability.

It has been observed that investors have different attitudes in their approach to India.
When it comes to making investments in India, the foreign investors diverge from debt financing toward equities.

The other regional markets of Asia Pacific apart from India and China are also grabbing the attention of foreigners.
It is mainly because in these other markets there is an interesting connection between a drive toward omnichannel retail and spike in the logistics sector. A new revolution of the landlord-tenant relationship has emerged due to this linkage.


India to continue to lead the global commercial real estate investment markets in 2019

The increasing strength of tech companies and flexible space providers are some additional factors that drive the Indian, Chinese and other key markets of Asia Pacific.

The Foreign reserve levels of Asia Pacific market region is far better now than what it was in the past. A whole new set of circumstances will decide the resilience of the Asia Pacific market.

Since there is sustained growth in the economy chances of investors getting uncertain are high. Both occupiers and investors are probable to rethink their strategies in terms of both portfolio composition and allowing for greater agility.

Advantages of Investing in Commercial Property.

Thinking of Investment in Commercial Property… Should be known with these given advantages, while investing in commercial property.

Summary:
 Commercial real estate investing is one of the most safe and sound avenues of creating long-term wealth and prosperity.
 Many investors, who are not aware of the advantages of investing in commercial properties, still fall into the trap of residential real estate investing that offers lower returns.
 Also, it is a myth that investment in commercial real estate property is not meant for small, retail investors.
 Investment in commercial property is much easier and fruitful.

Everyone is looking for prudent ways of investing, in order to create wealth and prosperity. Real estate is indeed the top most option, when it comes to safe and sound returns on investment plus long term capital gains. It is very difficult for one to choose between Commercial Property and Residential for investment purpose.

Is this a myth or perception that residential property is the best when it comes to investment and commercial property is only for HNI’s? Well there are many factors involved in the decision making.

Let us quickly take a look at the advantages of Investment in Commercial property. This generic note will throw light on the fact that investing in either is not risky or meant for a select class.

Investment in Commercial Property is as lucrative as a residential property. It is just that one should be cautious before finalizing the deal.

 

Points to be remember while Invest in Commercial Property:


– The minimum average rental yield is in between 5-10% a year.

– Lease is usually signed for a long term. The minimum period is at least 4-5 years.

– There is an assurance of getting consistent returns from investment made in this type of property.

advantages-in-investment-in-commercial-real-estate-property
advantages in investment in commercial real estate property

– The tenants usually fall in the category of corporate channels, banks, business houses or retail chains that have good income to dispose off. It is very easy and convenient to deal with the se type of tenants as there is no running around to chase the rent from such entities.

– Returns are assured in nature due to the clause of annual increase in the lease agreement irrespective of prevalent market conditions.

– A quality tenant has a ripple effect and helps in better future rental yields.

– One can get several flexible financing options like Auxiliary financing where you can buy huge commercial properties without actually using any of your own money by getting almost 100% finance.

– The valuation of the property is usually based on the rent rates rather than the properties in the nearby area.

– Investments made in multiple units at one location by and large helps in developing proportionate saving in costs.

– There is a wide choice available like shop, office Space, land etc for one to endow.

– There is no additional cost of furnishing.


So in short investment in commercial property can be your next step that you look forward for deriving profitable returns.
The buyer should venture or be in favour of commercial property only if they have a clear picture of overall property including
its location,
reputation of the builder,
amenities and
other environmental factors.

Though the biggest motivation here is the high rental yields but mind you that is not suffice to nurture in to the business. The Investors should always zero down for only those builders who specialize in commercial property.

Each type of commercial property is different from the other. These days the market is witnessing the trend of leasing the commercial property instead of outright sale by the builders. Off late the builders prefer to put the commercial property on long term lease and are not willing to sell them.

NRI Investors boosts investments in Commercial Property in India

This is How NRI Investors boosts investments in Commercial Property in India.

Summary:

– Indian expatriates from : UAE, Qatar, Saudi Arabia, Kuwait & Oman are those NRIs who seem to be keen on making investments into commercial property in India .

– The 4 metros :  Delhi-NCR, Mumbai, Bengaluru and Chennai in addition to Pune and Hyderabad are currently seeking attraction for the lion’s share of NRI investments.

– Irrespective of the given fact that Equities tend to score higher than real estate on capital appreciation.


Foreign investments in Indian commercial property segment are all set to scale new heights. What majority contributes to it is the new enhanced government policies and convalescing transparency with economic reforms.

Very soon the Indian commercial real estate property is bound to see increasing investment infusions from their Non-Resident Indians (NRIs).

To make this possible Indian law has started permitting 100% FDI (foreign direct investment) in construction development.Also REITs is now in place for commercial real estate.


Sources from a World Bank report reveal that India was in receipt of 79 billion USD by way of remittances in 2018. A substantial part of this amount was witnessed making its way into real estate.

Let us quickly figure out the main features that happen to make these cities as top picks:

– The increasing rise of bright employment opportunities due to their growing economic environment

– Doing business is no more a hassle.

– Infrastructure being given a face-lift which in turn escalated their living ability quotient.

– Making air connectivity affordable and convenient with world cities along with healthier intra-city connectivity by way of escalated highway construction

– Markets like Noida and Greater Noida are gaining increasing levels of capital inflows from the NRI buyers.
Thanks to superior infrastructure, Metro Rail connectivity and proposed international airport.

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UAE: the chief NRI market :


It has been observed that the largest concentration of Indian population outside India is located in UAE. The UAE accounts for nearly 3.3 million Indian population. The NRI segment of Dubai is predominantly a huge customer base for Indian real estate. That’s why NRI Investors boosts investments in Commercial Property in India.

According to the Reserve Bank of India, 26.9% of inward remittances were accounted in the UAE in 2018. The bank further added that it is the current decline in value of rupee against the dirham that has heightened remittances and made the possibility of Indian real estate investments even more lucrative for NRIs.

NRIs by and large prefer to make Investments In India :


NRIs mainly prefer to invest in properties located in and around their home state or city. The reason being they are more familiar with the territory and also have either family or friends to look after the management and renting aspects. However there are some investors who do foray into other cities as well.

As a practice NRIs were mostly found making investments in high-end luxury properties as these properties tend to offer them the same international lifestyle that they are accustomed to. Luxury properties generating a substantial rental income was an additional advantage.

With the passage of time NRI Investors boosts investments in Commercial Property in India moving their interest to affordable and mid-segment housing. It is the Indian Government that pulls them towards this investment by offering considerable incentives to buyers of such housing. As these type of properties are in huge demand they therefore deliver a higher rental yield in addition to a better long-term appreciation.

Away from dubious developers, NRIs now prefer to park their investment only with builders who are reliable and organized. They only opt for the projects that are registered under the Real Estate Regulation and Development Act (RERA) who pursue transparent business practices.

Real Estate versus other modes of investment :


NRIs have the liberty to pick and choose from a variety of asset classes when it comes to investment. Over the last 5 years the equity market has drawn a considerable interest of 12-15% as they have performed consistently with a CAGR (Compound Annual Growth Rate). CAGR growth of 2-3% has been seen with real estate investments in Delhi, Mumbai, and Bengaluru during the same period.

Equities do score higher than real estate in terms of capital appreciation but they do not share some of the additional benefits of real estate. A real estate investment comes with the additional benefit of rental yield that carries a relatively lower risk and comes with considerable tax benefits.

Real estate investments are relatively stable than equity markets that fluctuate very heavily. The intrinsic value of investment in real estate is largely stable and tangible, while equity investments do not have any intrinsic value and there can be a substantial loss of capital in case of indices going down.

This is why, NRI Investors boosts investments in Commercial Property in India not in other means. Even if there are less to moderate returns in the immediate term, there are brighter chances of wealth creation in the long term.

The Future of Real Estate Sector in India :


The regulatory environment for the real estate sector in India has improved by several folds. Goods and Services Tax (GST) and RERA implemented by the government have given the Indian residential real estate industry an aura of transparency and accountability to strengthen the NRI Investors boosts investments in Commercial Property in India as interest.

Developers are always attuned to this high-potential clientele. They extend attractive offers to NRI buyers and also leverage technology like Augmented Reality (AR) and Virtual Reality (VR) to reach their expatriate audience across the globe.

NRI investors are seen turning their attention to commercial property sector in India. This asset class is very close to the heart of every Indian in spite of where they live and work across the globe.