Do Investors Prefer Commercial Real Estate Over Residential Real Estate?

An investor who wants to build a profile for himself would prefer multiple real estate investments. Commercial properties are more lucrative in terms of higher ROI. They are usually leased out at a high rate which becomes profitable for an investor. Commercial properties such as malls, shops, factories and retail chains are less volatile than other real estate sectors. With the advent of a time that is new, fast-paced and different from what we saw and knew a decade back, there is more expectation from the economy and change in outlook. People want o build their portfolios as an investor and #commercialrealestate can fuel the dream quite easily. Let us see how in these following points:

Shifting Trends

There has been a major shift in preferences for realtors. #commercialinvestment has seen growth in the past few years. With more and more real estate investors preferring to create a strong portfolio in the market for themselves, there has been a growing importance in commercial real estate. Whether it is retail, shops, or office stocks commercial real estate is an attractive sector to invest in.

Even a decade back owning a home was the prime priority for all and sundry. But the times have changed and commercial assets are considered sophisticated. With India becoming a top emerging economy in the world, growing number of investors are shifting their preferences towards commercial real estate. South Asian economy is largely fuelled by India’s growth in real estate for the last 2 years. Buyers and #investors are aware of the high ROIs churned by commercial assets.

Diverse Portfolio

One can own multiple and mixed assets such as offices, spaces, rental utilities, etc. This intensely diversifies one’s profile as an investor. Risk is less in commercial asset management. Commercial stocks give higher returns too. Market shocks and various other risk factors have lesser impact on commercial realty compared to stocks and bonds. ?

High Returns

What you invest is not what you get back. But you get back three to four times more than what you play with when you are dealing with commercial assets. Rental yields are high. Warehouses can give more than 5% returns. Office spaces yield up to 9%. IT parks and business zones generate a high-volume return between 6-8%.

This when compared to #residentialproperties is much higher as the latter can yield not more than 2.5-3%.

Brighter Future

With better income and rolling annual accounts brighter future is a definite possibility that comes with commercial assets. A realtor would always look forward to a brighter and greater future. With commercial asset classes he can opt for it quite easily.

Increased Demands

These are truly the changing times where there are shifting trends in preferences and demands. People opt for various kinds of properties and with the open market brought about by increased number of REITs, there are a wide variety of portfolio investors.

This has resulted in high demand for commercial assets. With added lucrative capital appreciation demand is a growing entity. ?Also, lease is for long periods which results in stable future.

Steady Rental Income

A shop or any commercial space can generate more revenue than a home or a standard asset. Rolling and steady income is made possible solely by commercial real estate investment. #realestateinvestment

Inflation being on the rise people are always on the lookout for long-term stability and growth. Investors can fight against inflation with rising property prices and rental yields being in sync. However, there are various things that an investor must keep in mind before investing in a property. Quality, taxation, bylaws, local zoning laws, insurance, repairs (if it’s an old property) and local authorities must be understood well to make informed decisions.