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Investment in Commercial Properties


Investment in Commercial Properties

Last updated: September 8 2010
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  • Investment in Commercial Properties

    The rapid growth in the Indian economy resulted in tremendous growth in the disposable income of India's middle-class population. With rising salary levels, tax rebates in the housing sector and liberal bank financing, many already have their own house. Many people who own a house are planning to acquire a second or third property purely for investment purposes.

    The property sector in India has seen bumper growth in the last few years. Properties are being transacted at unbelievable prices. Normally, people tend to invest in residential property for rental returns and capital appreciation. Investors should not ignore the investment opportunities in commercial properties for rental returns and appreciation too. Experts say that rental returns on an investment in a residential property is 5-6 percent per annum while an investment in commercial property normally yields a rental return of 12-15 percent per annum on the invested amount. With current market conditions, a conservative estimate of appreciation on an investment in property is about 20 percent annually, though many times more.

    There are many types of commercial properties available in the market. For example, shops, showrooms, office space, commercial land, space in malls etc. Investors can invest in various commercial properties based on their investment portfolio. For example, small investors can look for investing in a small shop space in a prime locality and rent it out to a bank for an ATM. Larger investors can look for office space and rent it out to smaller companies for office purpose.

    Banks and financial institutions offer a range of financing options for the purchase of commercial property. They typically fund 70 to 80 percent of the property value. The loan is secured against the future rent receipts from the tenant, which goes directly to the financing institution to repay the loan.
  • #2


    Re : Investment in Commercial Properties

    Investment Decision

    I completely agree with you Mr. Pinnacle.

    Investment Decision :: whether it is in the stock market, a new business venture, or some other enterprise, is a major decision. All investments carry with them some form of risk, and because of this risk most people prefer investing their money in banks as stocks and bonds rather in some profitable venture.

    The most lucrative and profitable investment in India is investment in property. Be it land, houses, flats, shops, office space etc.

    Real estate has been the most fruitful investment especially in metros of India. Investing in Residential Property has always been a good investment proposition as it gives a sense of security to one and most of the time is a profitable venture.

    Investments in Commercial Properties leased/rented out for office purposes become profit-making within a span of 6 Years or even less depending upon the location.
    The Retail Industry has seen a tremendous progress in recent years and the full potential of the Industry is yet to be realized. Retail Investment is the newest mantra in Real Estate Investments!!

    So instead of getting confused, just choose a suitable investment that will increase in value with time.


    • #3


      Re : Investment in Commercial Properties

      Not able to find banks to give loan

      I too agree with what you both say but donot find any bank that give commercial loan. Seems to be tough to find one. Please let me know if any is available.


      • #4


        Re : Investment in Commercial Properties

        The Real Estate sector in India is attracting huge investments. Private equity players are considering big investments, banks are giving loans to builders, and financial institutions are floating real estate funds.

        Indian real estate has huge potential demand in almost every sector, but especially commercial, residential, retail, industrial, hospitality, healthcare etc. But maximum growth is attributed to its growth from the booming IT sector, since an estimated 70 per cent of the new construction is for the IT sector.


        • #5


          Re : Investment in Commercial Properties


          I'm interested in investing in commercial property. In fact i'm close to finalizing a deal for an office/shop space in pune (NIBM road).

          I would like to know if the returns are better in commercial investing as compared to residential? I'm in this for the long term term and the cash flow it would generate.

          My prime focus is on monthly cash flow- factoring this, is it a wise decision to invest in commercial as compared to residential? UR THOUGHTS..PLS


          • #6


            Re : Investment in Commercial Properties

            Invest in Commercial Showrooms at Bavdhan, Pune.
            Size - 450sqft approx
            Price - Rs 5500/sqft

            Ground Floor showrooms facing main road at Bavdhan


            • #7


              Re : Investment in Commercial Properties

              Ideally the RE commercial segment is due for a jump in short time as the financial situation is improving and FDI investment growth is also encouraging.


              • #8


                Re : Investment in Commercial Properties

                Why is a 2007 article used for pump up advice?

                Back in the boom times, this is the kind of advice that had hordes of people beating each other up for a piece of the action!

                Why is a 2007 article being used to pump up Commercial RE in Pune when Retailers are uniformally talking of 15% - 40% drop in business?

                Is this Commercial / RE brokering in disguise?

                Folks, every opportunity area has sharks hovering around to take the unwary for a royal ride - especially in these lean times!!! First learn the downsides of commercial RE buying before thinking of jumping in!!!



                • #9


                  Re : Investment in Commercial Properties

                  Agreed Mr Wiseman...

                  Thanks for for insight... RE will be in doldrums for some more time to come...


                  • #10


                    Re : Investment in Commercial Properties

                    Commercial - bhavdhan

                    Hi Vijay Gupta;

                    Any particular projects (commercial) projects in bhanvdhan that u can recommend ?


                    Have any questions or thoughts about this?