Tag Archives: Commercial Property

New Investment Avenue: Investment in Commercial Property

In the existing investment market one of the fastest growing domains is investment in commercial property. Unlike investment in personal property the rate of return is on the higher side.

The concept of commercial property is different from that of personal property. A personal property is mainly used for personal use whereas commercial property is used for business purpose

With economy on the rise, India is becoming an important market for investment opportunities. Foreign Direct Investment is coming in rapidly to the tap the potential resources. Especially, with IT industry spreading all over the country, even the smaller cities have become a hotspot for setting up offices. Further, SEZ has fuelled the expansion in the last couple of years.

The companies who are investing have to minimize the expenditure to maintain the profit margins. Thus, many companies are renting commercial properties rather than buying land. This factor has generated the growth of commercial property investment.

A commercial property can be used for various purposes like setting up offices, warehouse, branches, institutes and coaching centres. To cater these business units the property should be ideal for business purpose.

The basic requirements to look into before investing in commercial property:

  1. Understanding the location and deciding the quantity of investment: Investment will only bring return if the investment is made at the right place. One has to study the area in term of business viability. If there are growth opportunities in the region then investment is ideal. One should look into the plans of the government on whether they want to encourage investment. The interests of the investors are also important. Based on these factors investment should be made.
  2. Availability of necessities: Commercial property investment does not end with the purchase of the property. One has to ensure facilities electricity, water supply and security. The availability of proper transportation and easy connectivity should also be considered before investment.
  3. Legal issues: The property should be free from any legal issues. One must not invest in a disputed property as it may turn off the investors.
  4. Proper agreement: The owner must have a proper agreement with the business units they are leasing or renting their property. This is necessary not only from return point of view, but also to maintain goodwill of the property. Any act violating the law can be detrimental for the reputation to the commercial property.

The investment opportunities are ample; one must not just eye for the IT sector. The rise in standard of living has also played a major role in increasing the demand for commercial property. With shopping complex and malls opening at rampant pace investment opportunities are high.

Investment can be difficult initially due to shortage of funds. A proper planning would help in getting loans from bank or other credit institutions. What must be remembered is that a commercial property can be taken by a single business house or be rented to small traders. So, it is necessary to understand the optimum use of the property. Those who have the appetite to take some risk and earn higher returns then investment in commercial property is ideal. Nevertheless, it is always advisable to study the opportunities and threats before making any investment as a wrong decision can result in big loss.