27 Jun Sale Of Commercial Spaces In India Is On The Rise In 2016
Usually, a residential property is an investor’s preferred choice when it comes to property investment opportunities in the country. Though the economic slowdown has had a negative impact on the real estate market, the demand for commercial or office spaces is on the rise. The office space absorption throughout the months of January to March saw an increase of 11%, which was 8.8 million square ft across nine metro cities in India.
It is seen that developing and maintaining commercial properties is done by major organizations as they require large investments and long-term commitments. After completion of commercial projects, the offices are leased out at current market rates while maintaining the building on a regular basis. It has been observed that one of the major factors driving the demand for commercial projects is the growth of the technology sector.
Factors Promoting the Growth of Commercial Projects:
The residential market is showing signs of growth, especially the affordable housing segments. However, it cannot be denied that it still stands in an unstable position. The yield for residential apartments is quite low at 2% to 4% per annum, whereas, commercial units yield as much as 8% to 11% and sometimes even higher. Thus, capital appreciation in the commercial real estate can be higher indicating better gains as compared to the residential real estate market.
The Growing IT Sector
IT companies have played a very important part in the rise of demand for commercial properties over the last two decades. The heavy investments in this sector continue to push the demand for commercial development across the country including some major metropolitan cities.
Rise of the E-commerce Age
The rise of e-commerce companies including startups, retail organizations and warehouse investments indicate a prospective opportunity for the commercial real estate market.
Also, the successful service sector including the banking, financial services, and insurance sectors have played a major role in propelling the demand for retails and commercial spaces.
With a significant growth in demand for commercial and retail spaces, it is an ideal time for investors to be part of the capital gains arising from it. They can be a part of opportunities such as purchasing of commercial properties, investment in funds directly concerned with commercial projects or buying equity shares of such organizations involved in commercial property development.
The year 2016 seems positive for commercial projects, especially after the initiatives taken by the government for the improvement of the real estate market. According to study, by JLL India, private equity finance purchase of retail property is expected to double this season to a figure of almost $80 million. Retail is most likely to play an important part especially due to an influx of foreign fund inflows, after the opening up of almost 100% FDI for this sector last year.
Thus, as predicted by real estate market experts, a positive economic growth along with a growing business confidence index due to government policies would impact the demand for commercial spaces over the year.