Investing in commercial real estate is not as difficult as it looks, if you follow the principles of long term investing. Furthermore, it is also evident that commercial real estate investment is better and beneficial than residential real estate investment as it offers better rental and capital appreciation. In Ahmedabad, commercial property can give you 6 to 7% return of the property value while residential property only gives 3 to 4% return. But, proper research is always required whether you are buying commercial real estate in Ahmedabad or residential real estate in Ahmedabad. Let’s look at some points which must be considered when investing in commercial real estate.
Location is one of the foremost concerns of commercial real estate buyers as they look whether property is capable of extended heightened potential or not. Commercial properties offer returns from two avenues which are rent and capital appreciation hence location is everything. You must find a location where vacancy is less than 5% which means supply is in check and the tenant is less likely to vacate. This will lead you to greater profitability and higher property appreciation. This is because a high vacancy location offers options to tenants to renegotiate rent and move without prior notice.
Demand vs Supply:
This is also one of the major points that commercial real estate investors look for before buying a commercial property. Every city has different developing markets areas such as Ahmedabad has SG Highway, ashram road, sindhu bhawan while Mumbai has Malad east, Marol, Kurla. The rates of property here are very high and property prices are continuously increasing. Each micro market has a stock and upcoming supply therefore, buying commercial real estate property at this place can be beneficial in future for the investors. Therefore, you must know the difference between supply and demand because a good supply chain implies a higher value, rapid liquidity and boosted prices.
There can be many buildings in the same location but one building that offers better quality of interior and facility will always get rented first. Furthermore, it also attracts better quality tenants who are professional and understand the rules and regulations of real estate buying. It is clear that this will fetch investors higher rents, higher capital appreciation and better tenant retention. This sudden move of investment to buy an office in Ahmedabad is also because of the volatility of the market. Other assets like stocks and gold are unpredictable in this pandemic time. If you are looking to buy commercial real estate property in Ahmedabad, then get in touch with us.
Details in interior:
Generally, in India, commercial spaces come without any internal setup and come up with nude space. Therefore, if you are buying or renting any commercial real estate property then, you must look for the interior setup and its cost if you are going to design it in future. There are many real estate developers in Ahmedabad that try to attract buyers by showing the interior and ask for higher rent but the rent with interior is higher but only for a short period of time. If you are looking to buy commercial property in Ahmedabad, then get in touch with Swati Procon as we have various commercial projects going on at poshest areas of Ahmedabad. You must also take care of market rent vs in-place rent while buying a commercial space in Ahmedabad so that better ROI can be ensured.
Quality of tenant:
When buying a commercial property, you must not look at the location only but also look for the neighbours and quality of tenant. This is essential because the quality of the tenant can increase the value of the property while unethical and indiscipline can decrease and affect the value of the property. This is good for developers and also good for developers because good tenants pay rent on time, stay for longer time, pay higher deposits and maintain personal connections.
The lease structure of commercial property is totally different from residential property in Ahmedabad. Commercial space in Ahmedabad follows 3, 9 or 15 years of contract period and revised every 3 or 5 years. On the other hand, in residential property deals in Ahmedabad, you can also have a contract of one year or two years. You cannot vacant the space without prior notice or locking period and if you do this then your deposits would freeze. Therefore, buyers must look at all those points and factors before buying any property so that they can manage living there without any confusion and complexities. To know more about how you can invest in commercial property in Ahmedabad and different properties, get in touch with the team of Swati Procon or give us a call.