5 Points to Remember Before Invest in Commercial Real Estate Bhutani Group
5 Points to Remember Before Invest in Commercial Real Estate Bhutani Group

5 Points to Remember Before Invest in Commercial Real Estate Bhutani Group

Wanting to invest in commercial real estate may not be as complicated as it appears if some of the important aspects are taken care of. There is a possibility of earning more than debt instruments if the principles of long-term investments are followed.

Points to be remembered for investors investing in commercial real estate should factor in before making the big decision.

Location & Connectivity

Looking for locations with less than five percent vacancy can help keep supply dynamics in check. That shows that there is no excess supply and that the property will have a higher chance of buying and renting.

The limited level of supply would automatically lead to

- Capital Appreciation and

- Higher Rents

- The two prime sources of generating revenues from commercial property investing.

Background Check of the Developer

Before investing in any commercial project, an investor should always check the background of the developer.

Make sure that the developer has successfully built projects in the past and try to visit those projects. That will give you an insight into his experience and expertise.

Quality Check

Much like what is seen fetches the most customers, the buildings that are spoken of as better with quality services and rents will be rented first. The investor stands to gain in terms of faster capital appreciation, better tenant retention, and higher rents.

Buildings with LEED gold or platinum ratings, more elevators, higher ceiling heights, better views, and nicer-looking lobbies have more rental value. One can look for multinational tenants who look for quality and are even ready to pay a premium for that.

It is also good to keep in mind that such properties are more liquid and quickly saleable.

Analyzing Demand Versus Supply Dynamics

Investor needs to analyze the area before deciding to invest in commercial real estate property.

Every city has its own micro-market such as Mumbai having BKC, Parel, and Nariman Point while Bengaluru has Electronic City, ORR, and Whitefield. Each of these has its own stock and upcoming supply.

If the annual supply over the next couple of years exceeds the previous demand, then the rents would come down. The higher supply would affect both old and new buildings. While tenants in the old buildings will renegotiate rents and clauses, the new buildings will have lower rents.

Diversification of Investment

Having a diversified portfolio of investments reduces risks. Investors should be mindful of locking all their savings into one property that may stop yielding rental revenue once a tenant vacates.

If your corpus allows, diversify your investments across different properties so that even if one of your assets does not generate desired returns, you have other properties to make up for it. The above points help you to invest in commercial real estate easily.

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