With ROI from residential properties no longer fulfilling the expectations of NRIs, a massive number of NRI investors are now choosing to invest in commercial assets, especially in NCR and Noida. At present, Noida is one of the hottest investments cities for IT business parks, smart offices, and co-working office spaces.
According to industry experts, specific dynamics and market cycles based portfolio optimization has been hugely directing the NRI investor’s decision making aptitude and sentiments, especially in the last few years. The residential properties are not in so well condition and need a significant amount of time to recover. Thus, to an NRI residing or working in a different country, a change from tradition is growing mostly evident.
In the present scenario, NRIs are becoming more interested in investing in commercial real estate, which gives improved rental profits and capital appreciation. The primary reason behind the same is that there is a considerable rise in the demand of office space in the stir of extensive requirements and the possibility of REITs establishment, especially for IT parks, grade A offices, and co-working spaces.
The evolution and business growth in top cities makes a continuous upward route on demand for high-quality commercial spaces, while supply is quite limited, it means that all available quality offices are guaranteed of tenancy. Furthermore, the dominant start-up culture is also increasing the demand for co-working spaces, also called shared office spaces. These kinds of commercial places are utilized by start-ups and new businesses which cannot afford huge costs of quality office.
The last three to four years have witnessed muted sales, rectification in estimating (often substantial) in most marketplaces in the residential property sector. Also, low housing rental profits have distracted investors, especially NRIs.
In contrast, the commercial property market is seeing great leasing and discreetly escalating capital rates. The profits on commercial possessions are much more decent than residential properties. Thus, NRIs have turned towards business or commercial properties in the last three years.
There are two major types of returns in any real estate investment options, capital appreciation, and rental yields. If we see the latest statistics, according to a study, in India, rentals for commercial space was assessed to be around 5.5% of the possession value. But, for housing option, it was assumed only 1.5% – 1.7% of the asset value. Also, modifications such as RERA provides more secured and extensive investment choices for NRIs, safeguarding their investment rise towards commercial properties in India. In addition, the property investment in the commercial sector in India is considered more organized and professionalized. Investors whether NRIs or Indian residents have to make an informed decision to achieve maximum profits in the market.
Source: https://www.linkedin.com/pulse/commercial-property-investment-new-path-income-nris-harsh-gupta/
