Once a non-preferred investment market among NRIs, the Indian commercial realty market is now emerging as a favourable investment option to earn good Returns on Investment. Reason attractive economic policies, opening up of Foreign Direct Investment (FDI) and rapid urbanization are calling upon NRIs to focus more on the commercial market than the residential one. Other advantages include high rental yield, long lease tenure, etc.
Moreover, the implementation of strict policies like RERA and GST has improved transparency and accountability making the Indian commercial market investor- friendly. Take a look at various factors that are making Indian Commercial Realty Market a hotbed for real estate investments:
Leasing Assistance by Developers
While investing in Commercial property, an NRI gets various leasing assistance offers by the developers. For example, some developers offer a standard assured lease for a period of 9 years along with a lock-in period of 3 years.
However, these days in order to woo NRIs; several renowned developers have increased the assured lease tenure by 21 years along with a lock-in period of 7 years.
As compared to residential property, the commercial property gives more benefits to NRIs when it comes to investment. Leasing commercial property, yields more rent to the owner than a residential unit. For instance, a well-developed commercial property offers an average rental yield of 6-10 percent. On the contrary, in the case of residential units the average rental is only 1.5 to 3.5%.
Apart from this, commercial properties also offer better assured returns i.e. capital appreciation till possession that varies from 10-12%.
Low Maintenance Cost
Another advantage of investing in a commercial property is that it needs less maintenance as compared to a housing unit. Unlike a residential tenant, a commercial property tenant doesn’t leave a place before 10-20 years. So, it’s obvious that the company will only bear the maintenance cost and not the owner. On the other hand, in case of a residential unit, the maximum tenure of a tenant if 1-2 years, so after every exit, the house needs to be maintained and here the cost is bored the NRI owner. Also, you need a caretaker to look after the property and you only have to bear the expense.
Hence leasing a commercial property gives NRI owner a feeling of relaxation as well as stable income generation too.
Loan Facilities and Tax Benefits
To woo NRI investors, the government has launched many investor-friendly loan schemes that call upon them to invest in the Indian commercial market. With the help of private and nationalized banks, an NRI can easily avail loan by linking all the documents as well as title papers which can be further verified by the banks.
Apart from easier availability of loans, an NRI can also enjoy tax benefits under Section 24 and Section 80C of the Income Tax Act. But, here an NRI has to pay higher rate of interest and the loan tenure also ranges between 5-20 years.
Prominent Cities to Invest
The commercial real estate market of India has flourished to a large extent in the past few years. Cities like Bengaluru, Chennai, Hyderabad, Pune, Gurgaon and Mumbai has witnessed a steep jump in the launch of new commercial projects offering higher capital and rentals.
In South, Bengaluru has seen major traction in the demand and supply of commercial units. The reason behind this is increasing startup culture, coworking spaces and popularity among leading global MNCs for setting up their base in India.
In North, Gurgaon has maintained this type of momentum. The city is hosts to around 250 fortune 500 companies and many other are in the list.
Future on NRI Investment in Indian Commercial Market
Experts suggest that the NRI investment in the Indian Commercial market will further increase in the coming few years. With strong government policies, FDI investment and other benefits, NRIs investment can change the face of the complete commercial realty market.