Strata-Sold Commercial Realty: Higher ROI, Different Rules

·       A lifeline for developers, lucrative option for NRIs and HNIs earlier focused on housing

·       Rental yield for Grade A commercial assets anywhere between 8-10%, 6-8% for Grade B against an average of 3% in residential

·       Av. investment ticket-size INR 10 lakh in tier 2 cities, nearly INR 10 crore in tier 1 cities

Anuj Puri, Chairman – ANAROCK Property Consultants

In times of continuing low residential sales, developers are seeking alternatives to infuse liquidity and boost business. Strata sale (sale to retail or individual investors) of commercial assets (office and retail) is emerging as a lucrative option.

Individual investors also seek alternate high-yielding investment options in Indian real estate to compensate for the almost negligible returns that housing has yielded over the last 5-6 years.

Strata sale of commercial real estate presents a huge opportunity to local as well as national developers. To maintain their cash flows, many are now listing anywhere between 25-40% of their office supply for strata sale.

Early in 2019, realty major Prestige Estates announced its plan to strata sell 25% of its office assets to individual investors looking for plays in high-yield realty assets.

In what is now a rare win-win situation for real estate investors and developers, the former can earn high returns and the latter can generate liquidity for business expansion.

For developers, strata sales also eliminate the need to manage commercial properties. Thus, the strata-sale route allows them to consolidate their rental business.

Read the rest here: Strata-Sold Commercial Realty: Higher ROI, Different Rules