Making a property investment in India is beneficial for NRIs because of various factors such as high return on investment and the fast developing nature of Indian economy. However, most NRIs concentrate on investing in residential properties owing to its high popularity. Buying office or retail space is as good an investment as a residential property. Most of the cities offer small units of space which provides high rental income and promising returns on investment.
Why invest in a commercial property?
- The rental yield from commercial properties is much higher than residential properties. Especially in comparison to the size of the property, the yield is significantly different.
- The demand for commercial spaces of different sizes are on the rise. From small units to large building, there are takers for all types of commercial property.
- Commercial spaces offer the advantage of longer leases. A residential property is usually rented out for a year or two. Once this period lapses, the owner has to look for another tenant. However, commercial units are offered at longer lease periods assuring a steady income.
- The steady economic growth of India ensures that there would always be demand for commercial units.
What to look for while investing in commercial property?
- Commercial properties are usually leased for long periods. Hence, it is critical to find out if the commercial property is already leased out to someone. If it is, then the term of lease, lock-in period etc. should be considered.
- The expenses involved in this investment such as property taxes and insurance should also be included while calculating the investment. Maintenance of these units is also an important factor to be considered. Especially being an NRI, a high maintenance commercial property would not be viable or practical for the investor.
- Investment in commercial units is considered viable when the rental yield is high. To find a property that provides good returns requires detailed research and on the demand.
Detailed research should be done on:
- Future infrastructure development prospects
- Demand and supply dynamics in the locality
- Job market
- Public transport availability
If the property is purchased for use by the investor itself, then the business requirements should be considered before making the investment. The frontage that the property has, similar establishments in the locality, etc. should also be considered.
The inflow of rental income is high and steady in the case of a commercial property. A well located commercial property would yield an NRI investor double the returns in terms of appreciation of land value and a sizeable rental income. With good research and proper investment plan, a commercial unit investment would be as good an investment as a residential property buy.