Real Estate Pros and Cons Of Investing In Commercial Real Estate
Real Estate Pros and Cons Of Investing In Commercial Real Estate
Pros and Cons Of Investing In Commercial Real Estate
Commercial real estate has been one of the popular asset class in terms of investment in India. Being an investor, it is whether it’s worth venturing into the commercial real estate sector or to help you make the right decision, here in this article we will offer a detailed picture of the benefits and drawbacks of investing in commercial real estate.
Experts reveal that real estate properties like office spaces, retail spaces, and malls are some of the most lucrative avenues to invest. Besides, developers are capitalizing on the concept of building shopping malls close to residential housing complexes. This model has worked out well in different urban sections of the country.
According to industry experts, retail investors might invest in shops or malls as they can enjoy greater ROI. Compared to residential spaces, the returns on investment from shops are relatively higher then residential propertry. when you own a shop, you can start your own business. In case you are not interested in starting your business at this point of your life, you can simply rent or lease the property out. Compared to residential properties, the charges and efforts involved in maintaining shops are also low. There are negligible chances of encroachment, particularly when you channel your funds to malls or shops.
A reputed data analyst company reveals that commercial properties offer better rental yields each year compared to the residential ones. For residential property, the yield is generally between 1.5% and 2.5% per annum. On the other hand, investing in shopping malls can give you returns from Minimum 6% to 8% a year.
One of the other advantages of investing in commercial properties is the ability to customize it depending on your budget. In case you are on a low budget, you can adjust the location and size of the commercial space you buy but the higher your buget will be the higher returns you will expect.
The tenure for leasing a commercial property is generally higher and ranges somewhere between 1-2 decades. It provides a secure and stable source of income for investors.
Apart from that, a commercial property is more rewarding over a period of time as compared to other residential properties.
The only drawback in investing in commercial properties is the lack of knowledge regarding zoning laws, tax codes, and property costs. This explains why experts recommend common investors to refrain from venturing into commercial property purchases. Handling such investments calls for expertise. This is where leading brokerage firms can guide you in making these investments in the right way so that you can benefit from the returns.
To Sum Up
Commercial real estate investment is one of the greatest investment avenues through which an investor may make serious profits. However, the more rewarding an investment opportunity is, the more risk it poses to the investors. As we have mentioned above, commercial property investments require a good amount of capital investment. There should be no room for mishap and miscalculation. It is recommended to do prior research on the situation, purpose, zoning, size, and state of the property before making a financial decision.
