NRI’s are investing in the commercial properties because of the long term appreciation that they can get in India is expected to be much greater than in any other country. Today, the government has brought in several changes in the law which has made it much easier for the NRIs’ to invest in the properties than before. By making investments in commercial properties, one can keep their portfolios protected from stock market volatility and inflation. The pride of possession, the chance of expanding your portfolio and the advantages of the extended lease that only commercial properties get are the reasons why NRIs opt for commercial real estate investment.
Listed below are some of the tips which would help an NRI choose the right commercial property:
- The location is one of the most important factors that need to be taken into consideration. Being an investor, it is the responsibility of the NRI to do enough research on the job market, economy and population growth of the market. In case the NRI is investing only for returns, then a micro-market is always a better option where job creation and economic growth are likely to be great.
- Commercial properties can be of various types like office and retail spaces. Unlike the earlier times, today not only the larger spaces but also the smaller spaces are available which makes it easier for the small investors. Moreover, NRIs looking for retail space can now consider a host of reasonable options such as shops in malls or independent high street outlets.
- Another important thing that the NRI should keep in mind when investing in commercial properties is the rental yield. Rather than concentrating only on capital appreciation, the NRI should ensure that the rental yield is not less than 11 to 12%. It is vital to remember that the value of the commercial property depends on the income that can be generated from it. It can also be said that capitalization of the property depends on the demand for the property directly.
- Due diligence is a significant part of the commercial property investment. Find out the credentials of the developer, accessibility to public transport, prospects for infrastructure development, and quality of property management. If you are investing in an office space in Noida, check the vacancy factor, the details of cash flows, expenditures such as property tax, maintenance, and lease term, building insurance, expiry dates and lock-in period, long-term capital appreciation perspective, and refinancing, repositioning and refurbishment prospects.
- In case the property is purchased for use by the NRI only, then consider the business necessities before making the investment. Also, consider the front portion of the property, a number of similar establishments in the neighborhood, etc.
If all these above-mentioned tips are kept in mind when investing in commercial real estate, giving it on a commercial lease can be long-term and very much profitable.
So, it can be said that a property investment in India is advantageous for NRIs because of high returns on investment and the fast developing Indian economy. And investing in an office or retail space is certainly more lucrative than investing in residential properties, especially if the property is only being bought for investment purpose.