Commercial Real Estate is one of the most lucrative investment options for institutional as well as retail investors. The opportunity of earning high rental yields is quite attractive for anyone looking to build a balanced portfolio of profitable assets.
But many of you would be skeptical about the prospects of Commercial Real Estate amidst the ongoing pandemic!
To put water on all your burning worries, here is our take on the current scenario in the Commercial Real Estate Sector. Despite the continued pandemic in India, the Real Estate Sector in total has held its nerves and sustained the lockdown shocks in the second quarter of 2021.
Speaking of the numbers, the latest data releases from a leading research firm for Q2 of CY 2021-22 stated that commercial real estate saw increasing fund flow from institutional investors. The inflow of capital in the real estate sector grew 9 times reporting to $1.35 Billion with more than half contribution towards commercial real estate.
Looking at the confident numbers, the future of Commercial Real Estate still looks positive. To provide you a better outlook and analysis, we will dig deeper into the favorable reasons why Commercial Real Estate is still the best bet in 2021!
6 Reasons to Buy Commercial Real Estate in 2021
1. Discounted Prices
The second wave of Covid-19 paused the activity in Commercial Real Estate with lockdown restrictions coming back. Owing to this, prospective buyers like offices and businesses are forced to defer their purchasing activities.
This has temporarily lowered the existing demand for CRE. Hence, the builders are offering attractive schemes and the prices are being discounted making them a worthy contender in your priority investments.
Every ‘Investment’ is governed by the thumb rule stating “ Buy Lower, Sell Higher”. Thus, now seems to be the best time to add Commercial Real Estate into your portfolio.
2. CRE Demand to revive
The second half of 2021 is expected to see a trend towards pre-covid normalcy. Since the complete ‘Work from Home’ setup does not apply to all sectors, companies would likely adopt a mixture of ‘Work from Office’ and ‘Work from Home’ to increase productivity and ensure business kicks up.
For this, a large stir of demand is anticipated in commercial spaces in the latter half of the year. To leverage on this demand, investors must take exposure in High-Quality Commercial Real Estate as the time is ripe.
3. Emerging Trends in CRE
The post-pandemic lifestyle and business practices have called for innovation and adaptation to newer trends in real estate. Referring specifically to Commercial Real Estate, the sector is welcoming the concepts like Shared Community Living, Warehousing, Cloud Kitchens, which are stealing investors’ attention from traditional office spaces.
The utility of such spaces is high and thus future demand is supposed to grow exponentially. These emerging trends are here to stay and thus, investors can cash in on such Commercial properties at their nascent stages.
4. Rise of Fractional Ownership
The biggest revolution in Commercial Real Estate is the introduction of the fractional ownership concept. A sector thought to be the ball game of the rich, Commercial Real Estate was a heavily expensive investment for the common investors to undertake.
With proptech firms offering fractional ownership, Commercial Real Estate is now available at an affordable cost for retail investors. Institutional Grade assets can be co-owned by multiple fractional owners through a Special Purpose Vehicle. Thus, a wider scope is opened for investors to unleash the profitability of Commercial Real Estate.
Assetmonk is the leading Proptech Company providing fractional ownership through smart real estate investments. The key focus of Assetmonk is to maximize the returns for its investors. Operating in top Indian cities like Hyderabad, Bengaluru, and Chennai; Assetmonk’s track record is 14 to 21% Annualized Growth rate with 8 to 12% rental yields per annum.
5. Boutique spaces for Start-ups
The inflow of start-ups in the past 1.5 years is massive and the pandemic has positioned great opportunities for dreamers to build their passion businesses.
This growing start-up space will require specialized office spaces in near future. Generally, smaller commercial spaces with a size of around 800 to 1000 sq. ft are called ‘Boutique Office Spaces’. With technology backing many start-ups, such compact office spaces are ideal. Investors must take the cue and allocate a part of their portfolio to Boutique Commercial Spaces.
6. Vaccination in the country
The increasing pace of vaccination in the country is beaming with hope for getting the country’s economy back on track. As and when the majority of India’s working class gets fully vaccinated, the daily and business operations in the country will come back to the pre-covid levels.
The current status of Covid vaccination in India stands around 41+ Crore doses in total. This number is expected to increase substantially by the end of the year. Thus, companies could return to their offices creating an increased demand for office spaces. This is a positive sign for Commercial Real Estate Investors.
Gauging the revival of the sector well ahead of time, the above 6 reasons give investors a complete guide to the prospects of Commercial Real Estate.
The popularity of Commercial Real Estate will stay more or less the same even in the coming years. Thus, hopping on to the best-timed opportunity, investors can leverage on the future demand by investing at slightly cheaper prices now.
Moreover, the promising inflow from the institutional investors rides on the rigorous valuations and analyses done by the fund houses or other financial institutions.
Thus, their acumen is pretty precise with a deep sense of market sentiments. Acting on the movements of institutional investors, the retail investors can take a well-balanced exposure in the Commercial Real Estate of India.
Also Read: Top 10 Best Real Estate Websites In India to Buy, Sell, or Rent Property
Top-Performing Types of Commercial Real Estate properties.
1. Warehouses
The increasing inclination towards e-commerce has paved a way for requirements of high warehousing spaces in the country. The warehousing industry received a total investment of $ 743 Million in the April-June quarter of 2021. Thus, warehousing spaces can prove to be a long-lasting investment in your portfolio.
3. Commercial Kitchens
During the pandemic, most people turned to online food aggregators for their food cravings. Thus, the traditional hotel and restaurant commercial spaces are likely to get affected.
What instead is a booming industry in the making is the ‘Cloud Kitchens or Commercial Kitchens’.
Operated as food providers for delivery, the demand for cloud kitchens is increasing day by day. Seeing this as a potential opportunity, Commercial Real Estate investors can look forward to such commercial properties.
3. Institutional Grade Commercial Offices
Premium commercial offices in the city hub are the gateway for a company’s growth due to networking opportunities and business growth. Thus, such spaces can never be out of trend. Investing in the best quality office space can prove to be profitable in the long run. Moreover, boutique spaces and coworking spaces can also be in demand in the latter half of the year.
4. Co-living Spaces
Since the concept of Co-living spaces is kick-starting in India, the new-age millennials would root for a perfect blend of social and private lifestyle with cost-sharing and flexible rentals. Thus, for long-term portfolio investment, co-living spaces can be a preferred option.
Also Read: How to Get Home Loan in India Complete Guide
Conclusion:
With this guide to your journey in Commercial Real Estate, you can make well-informed decisions and with partnering through experts can also build profitable commercial real estate investment. Don’t wait for your preferred right time to come! Get started when the market timing is right!