Quick guide to commercial rental yield in India

For commercial rental yield in India with higher liquidity, the investment on commercial properties is more. This is not the case with residential properties.

Before making a life-changing decision of a property investment in India, it is necessary to consider various factors. These factors vary depending on commercial vs residential property investment in India. The commercial segment and the commercial rental yield that it generates tend to attract the ones who have greater understanding of the commercial realty space compared to the first-time buyers who mostly go for residential properties.

While commercial spaces offer more liquidity to investors when compared to residential properties, the funds needed for commercial investment are far greater.

Factors such as location, price movement, connectivity, infrastructure development and sustainable practices play a role in determining a good deal for a commercial property in India. Experts from the industry believe that giant leaps from e-commerce companies and IT as well as IT-enabled companies are taking up much of the commercial rental yield in places such as Noida NCR.

Global conglomerates and global organisations are increasingly looking to set up base in the country and taking up space which is tied to their overall corporate strategies considering that they continue to offshore and send product or knowledge-based work in India. This means that the need for commercial properties is growing and will continue to grow. Considering that India does well on parameters such as cost effectiveness, scalability and talent pool, the numbers are only going to increase according to experts from the industry.

The growth prospects will be enhanced by public-private partnerships with states so that overseas investments can be attracted towards India’s growing and expanding urban centres. With the growing list of smart cities, sustainable practices and government’s push towards infrastructure and essential services across cities and towns, even in Tier-I and Tier-II cities, the demand is only going to grow, according to industry experts. For the growth of long-term commercial realty in India, the growth and development of transport hubs will also be essential. Infrastructural development in themselves, like Bullet Train and Monorail can develop prospects for future housing in the nearby areas.

When it comes to the investor or buyer’s side of things, it is important to consider commercial rental yield in India against the highest rental yield in India, and the growth prospects. For a buyer, it is no longer a debate of commercial vs residential property investment in India but it is much more than that. Other factors that make a commercial property viable are factors such as connectivity, proximity to residential areas, amenities, presence of other business establishments and safety among others.

The survival of the fittest for the long-term should be taken into consideration for the big units. For generating revenue immediately, it is good to start investing in pre-leased assets.

As per the terms and condition of the lease agreement, investors also stand to gain in terms of commercial rental yield in India through periodic increase in rentals.