What Makes Commercial Real Estate Attractive For Investment in India

Real estate, especially commercial real estate, is regarded as the best investment choice accessible. Following are the factors that make investing in India so alluring:

Price Escalation Scope in Tier-2 & Tier-3 Cities

Investors tread where the market flourishes. Till recent past, Metros or tier 1 cities were the dream destinations for investors as well as end users of real estate. But due to price escalations in these prime locations, the buyers and developers started exploring the suburbs or tier 2 & 3 cities. The governments also took up the cause and started pushing the development of infrastructure in these places. All the prominent tier 2 cities near Delhi- Ghaziabad, Noida, Faridabad and Gurugram are witnessing infrastructure development at full swing. Better roads and highways have inter connected the places in order to smoothen the movement. Faridabad, Noida, Ghaziabad (FNG) expressway is a wonderful example of this. With such an enticing background, real estate has also spanned its wings across these cities.

West Looking East For Markets:

The western and European companies have now turned their attention towards India in anticipation of new markets for their products and services. This has tremendously increased the scope for commercial real estate development. It is a feather in India’s cap that even against global downfall, the total office space leased in India during Q3 rose up to 16 million sq. ft. It is a jump of more than 26% from the last quarter. Delhi-NCR also contributed around 19% to the overall leasing activity in the country. Not just office spaces, the interested communities have explored many more options in the Indian commercial real estate sector. Retail outlets, hospitality, hotels, healthcare and industries are some of them.

Government Initiatives and Common Taxation:

Real estate sector contributes 6 to 8% to India’s Gross Domestic Product (GDP). Before the inception of GST, buyers had to pay VAT and many other taxes, charges and duties on purchase of a property. Since VAT and some other taxes/charges were state levies, their amounts varied from state to state. Under GST, a single tax @ 12% is applicable, that too only on under construction properties. No taxes are levied on constructed properties. This has not only reduced the prices but also made the taxes uniform throughout the country. Alike GST, government also introduced Real Estate Regulatory Authority (RERA). RERA has streamlined the processes and increased transparency in the working of the sector. In addition to this, the grievance hearing feature of RERA has generated more confidence among the buyers and the investors. Such initiatives have made real estate more attractive for the investors.

Rental Income Potential:

Regular rental income is a big incentive for investors to invest in real estate in India. The commercial properties rental yield is 4 times than that of residential. At present, one can expect 8 to 11% of rental yield from commercial properties. In many cases, developers offer guaranteed monthly rentals to the investors till the possession is given. In addition to this, many rental income generating schemes like- Fractional Ownership and REITs are prevalent in the market.

The domestic as well as foreign investors understand another aspect about India that here, any business which is based on population, never goes down. Commercial Real Estate is a shining example of this.

For sale/purchase/leasing contact Gitin Suri at 9810150047