6 Factors For Investing In Commercial Real Estate

The commercial real estate market is on the upswing and is turning out to be a great investing opportunity for all the investors. Introduction of reforms like Real Estate Regulatory Act (RERA) and Goods Service Tax (GST) has proved to be game changing for the industry. More corporates and start-ups are in search of office spaces. At the same time there is rising demand for co-working spaces. If you are planning to invest in commercial real estate, then here are the factors you should consider before you don the investor cap.

  1. Location – Location plays the most prominent factor in deciding the profitability for real estate investment. For commercial properties, proximity to markets, warehouses, tax-exempt areas etc. are the main deciding factors.
  1. Quality Matters – Quality is the foremost criteria to bank on while investing in commercial real estate. It goes without saying that quality attracts tenants the most, be it local or multinational. One must look for trustworthy certificates like LEED Gold or platinum ratings before investing their money. Class A properties provide a variety of high-end amenities. They are the best in-class assets to attract high rents.
  1. Demand Vs Supply – One of the most essential factors an investor has to keep in mind while committing to invest is the demand and supply of the commercial property. Every city has its own micro market which keeps a check of the stock of offices that are already completed and leased. It also keeps a check on the upcoming supply.  Annual demand is regularly published by brokers like Knight Frank to give the investors an overall idea of the latest trends.
  1. Tenant – A good tenant is like an asset and significantly contributes to increasing the value of the property. Always go for multinational and reputed tenants with sound financial stability. They stay for a longer period of time and pay higher deposits.
  1. Security Deposit – Security deposits in commercial properties range between 10 to 12 months. If the tenant is looking for 6 months, it signifies that they are in search of short-term options. Startups usually are in search of smaller or short-term deposits.
  1. Risk Involved – Experienced commercial investors always take services of a property manager or diversify their investments to avoid risk such as tenants leaving the investors dry and high. Make a list of all the pros and cons of the area you are planning to invest in from the industry that you plan to invest into the personal investment to give in to get the expected returns.

ESSPEE Group is a leading Real Estate Developer in Vadodara. We, with our 30 years of experience, believe in innovation, excellence and commitment to deliver the best commercial, residential and industrial properties.