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It is believed that the commercial real estate, which is seen as an indicator of economy is currently facing a declining trend. It has also been noticed that the bigger cities are left with a glut of office space which is seen pushing the vacancy rates. The question that props up in the minds of the people is that should investors continue investing in real estate presently.
Well, currently it is believed that commercial markets in majority parts of India have bottomed out. Hence, this is being considered as the good time for high net worth individuals to invest in commercial real estate.
Many people wonder as to why should people considering the slowdown and high vacancy level invest in commercial real estate over residential real estate. It is believed that the annual yield in residential properties is between 2-3.5 percent across the country. Moreover, in commercial today, one can expect returns anywhere between 9-11 percent.
There are some people who wonder if they are in the midst of a buyer’s market and whether investors can get good deals and negotiate. Well the answer to this is yes. It has been seen that today, many tenants are using this as an opportunity to move into either consolidate within one’s premises or cheaper locations also looking at renegotiating with existing landlords.
The 3 do's to invest in commercial property are taking into consideration the capability of the developer, 1) the kind of projects he or she has done before, 2) the kind of quality of finishes, 3) the way he manages his property.Also make sure there are no legal issues and the building is of sound quality.
The top 3 Negative points to be avoided in investing commercial real estate are:
(1)Don't follow a herd mentality.
(2)Keeping a close watch on vacancy is advisable.
(3)It is advisable to not go after the 25th best buildings in that particular micro market which one is looking at.
Well, currently it is believed that commercial markets in majority parts of India have bottomed out. Hence, this is being considered as the good time for high net worth individuals to invest in commercial real estate.
Many people wonder as to why should people considering the slowdown and high vacancy level invest in commercial real estate over residential real estate. It is believed that the annual yield in residential properties is between 2-3.5 percent across the country. Moreover, in commercial today, one can expect returns anywhere between 9-11 percent.
There are some people who wonder if they are in the midst of a buyer’s market and whether investors can get good deals and negotiate. Well the answer to this is yes. It has been seen that today, many tenants are using this as an opportunity to move into either consolidate within one’s premises or cheaper locations also looking at renegotiating with existing landlords.
The 3 do's to invest in commercial property are taking into consideration the capability of the developer, 1) the kind of projects he or she has done before, 2) the kind of quality of finishes, 3) the way he manages his property.Also make sure there are no legal issues and the building is of sound quality.
The top 3 Negative points to be avoided in investing commercial real estate are:
(1)Don't follow a herd mentality.
(2)Keeping a close watch on vacancy is advisable.
(3)It is advisable to not go after the 25th best buildings in that particular micro market which one is looking at.
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