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Investing in Commercial Spaces: When is it the right time?

September 20 2019

imageReal estate purchases are always major decisions requiring careful consideration of finances, location, risk and returns. The misconception is that investing in commercial spaces is a big investor, businessman forte. With due diligence, it is an excellent option for salaried persons as the asset will yield rich returns. So what are the key consideration points and when is the right time to invest in commercial spaces?

Risk assessment & stability of returns

The most important issue that an investor must factor in while investing in real estate is a thorough assessment of the risk involved, such as will the property yield good rental returns, can it be a long term investment, is there scope for diversification?

As compared to residential real estate, the commercial space has been performing better in the last few years. Commercial properties can give almost 8-10 % returns if factors such as location, demand supply, asset maintenance etc. are favorable. With 35 million sq.ft of commercial space expected to be in demand in the coming few years, investing (especially for smaller investors) in a stable income generating office space (that will provide a regular steady income) would be an ideal choice.

Viable Location

The property location is one of the key factors to consider before investing in a commercial space. The points to consider while selecting the location is whether the area is an upcoming location or an established one with a history of leasing activity (in fact selecting an under construction, emerging location provides lesser risk in terms of construction delays, tenants and vacancies), if the infrastructure, amenities and facilities make the property an attractive proposition for lessors, if the location has sound rental prospects, if there is scope for varied use (especially if the market caters to multiple industries or a specific one) etc. A prime location will mean a bigger financial input but it is poised to give healthy returns. As location is the crucial factor in any real estate deal, make sure you choose the right location before putting in the money.

Finances & Holding Capacity

Before investing in commercial spaces (the prospect of high rental income against a residential property is quite tempting) make sure that your finances are in sound condition. Are your physical assets and financial assets in balance? Physical assets are important to consider - they won’t give instant liquidity and must be looked at as an asset source that can fund your requirements, few years down the line.

Another issue to consider seriously is how long is your holding capacity, financially? What happens if the rental income is delayed or if the tenant clears out and then the property stays vacant for a longer duration? Are there plans in place to counter any competition that might come up in the surrounding spaces? These factors need to be considered before investing a large amount of money in commercial real estate.

As mentioned before, in contrast to the residential real estate market, the commercial segment has been performing well in the past few years. So, if you have an inclination to invest in commercial spaces, make sure you perform due diligence in terms of risk, returns, location choice, financial situation and holding ability and look at the property as a long term venture for when the market conditions are favorable for such a project.

A major brand in the Pune real estate market is Gera Developments. Renowned for their superior quality and innovative residential projects, Gera Developments is also a well-known name in the commercial real estate segment and are offering an intelligently designed commercial property in Kharadi Pune, Gera’s Imperium Alpha. Set in a dynamic business location, the bustling IT hub of Kharadi, Pune, Gera’s Imperium Alpha offers a range of smartly designed shops and office spaces to suit varied business needs. Gera’s Imperium Alpha offers state-of-the-art infrastructure facilities including an elegant frontage, high ceilings and ample space, firefighting system and the Gera 5-year Warranty. Visit the website for more information.



Testimonials

It has been a wonderful experience in owning a commercial space at Gera's latest offering in Goa GERA GRAND.

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My experience has been excellent. I have purchased an office in Gera’s Imperium 2 and a s..

Having a commercial space in and around Panjim was our long desire and this could be possible with Gera’s.

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First of all I would like to thank  you  and the Gera team for organizing different workshops at our doorstep.
The best thing I have done to my kids is that I  took a right decision to buy a flat in Gera.
Because of this decision , Vishnu could attend  the development workshops that were conducted.
Vishnu was a shy child who didn't like to participate in any of the programmes.
As far as Dale Carnegie workshops is concerned   it  has given him a lot of confidence and was presenting things in a much better way and I can see a lot of improvement in him.In simple words u made a person(..

My son Tattva had been enrolled in the intermediate level and has been coached by the Vishwanathan Anand Chess Academy coach . Tattva has made remarkable strides and will be on his way to get his FIDE rating in November. A lot of credit goes to the mentor for his unique way of handling his students. He has been very patient while working with Tattva on his areas of improvement. In addition before the tournament the coach had voluntarily added additional classes and doubled his efforts to get a better performance out of Tattva. He has shown complete ownership which is commendable. I hope he continues to develop more and more chess players in the coming days.

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