Commercial property is a building or land that is meant to generate a profit, either from rental yield or capital appreciation. Commercial Property may include Malls/Showrooms, Office Spaces, Shops, Lands, Farmlands, Warehouses etc.
For many, investing in property is a go to investment option other than low yielding fix deposits, bullion and high risk stock markets (Equity, Mutual Funds etc). The sense of having a physical asset which not just yields rental income but also gives you a good annual capital appreciation is a good investment move. Especially, Commercial properties, which have higher rental yields and capital appreciation than residential are a good investment option.
Commercial property investment in Hyderabad has seen a sea change in the recent decade with growing office space occupancy rate on one side and retail, financial and other commercial establishments on the other.
As in many cities, one of the emerging trends seen in Hyderabad is fractional ownership of commercial properties which is making the investment ticket size as low as Rs 10-15 lakhs in some cases for good monthly income or ROI when sold.
The commercial property market in Hyderabad is so favourable that few builders in Hyderabad have started leasing of commercial properties in premium locations instead of outright sale. These builders are not willing to sell their properties rather they prefer to put it on long term lease. A property with 10-14% rental yield can help to serve the loan against the property the builder took to build the commercial property.
There are many residential builders who venture into commercial property but fail to generate good value (high rental yield and capital appreciation) for their customers. Hence, it is always advisable that investors should trust only those builders who specialize in commercial property as against residential ones.
Resale Commercial Properties:
Unlike new commercial properties, the value of resale commercial properties can be gauged easily as they have existing tenants with recorded history of rental yields and capital appreciation. And moreover, the cost of acquisition will be comparatively low when compared to a new property. Hence, it’s advisable to prefer resale properties which are less than 15 yrs old over new commercial properties.
Common benefits of Commercial Property Investment
1. Rental Yields:
This is a main source of monthly returns on your initial investment. The average commercial property rental yield in Hyderabad is between 7-10 percent and is dependent on property type such as shop, office space, etc. It can be a nice parameter to figure out if you bought at the correct place and at the correct price or not. You can get a rental yield of up to 13 percent to 15 percent for a premium location.
2. High Capital Appreciation:
Any property investor who has been in the market will tell you that the big money in property investment comes from capital appreciation. It is especially higher for a commercial property. Capital appreciation on independent commercial buildings is between 5-10% per annum in the city based on location.
3. Consistent and Regular Returns:The commercial property lease contracts are long-term. A lease is usually signed for at least 5 years. Thus, unlike housing property, the owner is assured of continuous yields. The lease contract contains an annual increase clause regardless of market circumstances. Returns from investment in commercial property are therefore guaranteed in nature.