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.
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