Real Estate Investment: Since the implementation of RERA and several programs introduced by India’s government like the Smart City Mission and Start-up India Mission, the real estate industry in India has grown by leaps and bounds. These government programs created a wave of high demand for commercial properties. The biggest gravitational reason is the high returns on investment, which tempts people to buy commercial property in India.
Even though commercial real estate investment can reap great returns, it can get overwhelming for first-time investors. So, if you’re someone planning to invest for the first time, here are a few things to keep in mind to help you emerge successfully when investing in commercial real estate.
Tips To Consider Before You Buy Commercial Property
Invest In The Right Commercial Property
Finding the right commercial real estate property is crucial when you plan to buy commercial property. The commercial real estate property includes office spaces and various other property types like retail spaces, SCO plots, retail stores in malls, etc., which are also counted as commercial real estate. So, once you’ve filtered out the right type of property, it’s time to pay keen attention to study the market trends to find out what type of property is in high demand. It would be best to analyze the scope of future development in that locality/area from a long-term perspective. We’d suggest you should invest in a property in a developing area rather than a well-established locality as it will provide you high returns on investment.
Analyze the location before you buy a Commercial property
Location is one major element to consider before making any commercial real estate investment. No matter whether you’re planning to buy commercial property or residential property, choosing the right location is a must. To choose the right location for your commercial real estate investment, you can analyze how the property rates have fared in the last few years, the market’s property supply, and the absorption rate. Ensure the property you’re planning to put your hard-earned money in should be well located in a prime location, as it will assure you a great return on investment.
As mentioned earlier, that a good location plays a key role when you’re planning to buy commercial property in India; however, in some cases, two commercial real estate properties may be in the same location, but the one featuring better qualities will always have the upper hand and will attract quality tenants. Inessential to say it will get the investors higher rents and also higher capital appreciation. A multinational client would never mind shelling out money to pay a premium rent in return for good quality commercial space. Ensure you check for certificates like LEED gold or platinum ratings or building with top-notch facilities, more elevators, higher ceiling heights, etc. Quality properties are more liquid when it comes to selling them, and they can be sold much faster.
Analyze your Financial Position
Before you plan to buy a commercial property in India, the first and foremost step is to analyze your financial position. Remember that there’s always a risk involved in any business, even though you always have an option to take a loan to buy commercial property but repaying the same and manage the EMIs, even when there’s no rental income coming from the property is a big deal. So, make sure you calculate all the risks involved and analyze the scope of earning money from the commercial real estate you’re planning to invest in.
Thorough Check of The Property Documentation
While planning to buy commercial property in India or any real estate property for that matter, you need to keep your eyes wide open before investing or signing any paperwork. A thorough check of the documents involved will give the investor a better idea regarding all the legalities involved, such as – ownership details, loan to buy commercial property, mortgage, and several others. It is always advisable to buy commercial property through a reliable developer after doing the background check of the development, property layout, sanctions by different bodies, and land titles in case of a second sale. One major benefit of investing in commercial real estate is you have to spend a massive sum only once, and then you’re done.
NOCs & Approvals
Last but not least, before you invest in any commercial real estate, ensure that the entire project must be approved. All the building permits and approvals have been taken, including the building plan, water, electricity board authorizations, NOC from the fire department, environment authorities, and pollution board. Given the RERA registration, note that the project will take nearly 2 to 3 months to get a RERA registration after submitting all the NOCs from the required departments.
Commercial real estate investment can slightly be a daunting task and might turn into a nightmare if you lack knowledge and experience. But keeping the above important factors in mind, you can buy commercial property that will assure higher returns on investment.