Reasons to Invest in Commercial Property in PUNE
The graph of the real estate has been witnessing great progress in Pune, one of the most livable cities in the country. Residential properties have developed a lot as the city accommodates a cosmopolitan population. The market for commercial properties in the city has grown as well. This has boosted the trend of investments in commercial property and top real estate agents in Pune have contributed in the same.
Based on a national survey by property consultants Colliers International, from 2014, 63% of the investors interviewed by them opted to invest in commercial spaces. Also, as per the survey, from 2014-2019, around 7,000 crores have been invested in office assets and Pune is no exception. IT companies with a wide scope for business expansion along with other investors, now have turned their minds to buy commercial property in Pune. The dilemma of choosing one out of residential and commercial still troubles some of the investors. Let us understand how buying a commercial property can be great for your future and your family future:
The best reason to invest in commercial over residential rentals is the earning potential. Commercial properties generally have an annual return off the purchase price between 6% and 12%, depending on the area, which is a much higher range than typically exists for single family home properties (1% to 4% at best).
Small business owners generally take pride in their businesses and want to protect their livelihood. Owners of commercial properties are usually not individuals, but LLCs, and operate the property as a business. As such, the landlord and tenant have more of a business-to-business customer relationship, which helps keep interactions professional and courteous.
Retail tenants have a vested interest in maintaining their store and storefront because if they don’t, it will affect their business. As a result, commercial tenants and property owner interests are aligned, which helps the owner maintain and improve the quality of the property, and ultimately, the value of their investment.
Limited hours of operation:-
Businesses usually go home at night. In other words, you work when they work. Barring emergency calls at night for break-ins or fire alarms, you should be able to rest at night without having to worry about receiving a midnight call because a tenant wants repairs or has lost a key. For commercial properties, it is also more likely you will have an alarm monitoring service so that if anything does happen at night, your alarm company will notify the proper authorities.
More objective price evaluations:-
It’s often easier to evaluate the property prices of commercial property because you can request the current owner’s income statement and determine what the price should be based on that. If the seller is using a knowledgeable broker, the asking price should be set at a price where an investor can earn the area’s prevailing cap rate for the commercial property type they are looking at (retail, office, industrial, etc.). Residential properties are often subject to more emotional pricing.
Triple net leases:-
There are variations to triple net leases, but the general concept is that you as the property owner do not have to pay any expenses on the property (as would be the case with residential real estate). The lessee handles all property expenses directly, including real estate taxes. The only expense you’ll have to pay is your mortgage. Companies like Starbucks typically sign these types of leases, as they want to maintain a look and feel in keeping with their brand, so they manage those costs. you as an investor get to have one of the lowest maintenance income producers for your money. Strip malls have a variety of net leases and triple nets are not usually done with smaller businesses, but these lease types are optimal and you can’t get them with residential properties.
Good tenants lead to better returns:-
Tenants for commercial properties are corporates, banks, business or retail chains. An investor can easily reach them through top real estate agents in Pune. A most preferred option for leasing commercial property in Pune is corporates. Their work culture and minimum hassles make it much easier for the investors.
Also, a quality tenant or a good commercial name attracts more such tenants in the vicinity. If a commercial property is lent to a renowned business or corporate name, it will definitely bring more of such names and good tenants together; and great rental yields in the future.
Investing in a commercial property in Pune will lead to profits. However, this needs to be done in a planned way and yes, if done right, you will stay profitable for a lifetime.
At BHATNAGARS, we understand the tremendous promise of commercial real estate in Pune. We consistently strive to make real estate transactions profitable for our clients.
To know more about us and our offerings, reach out to us today!
Reasons to Invest in Commercial Property in PUNE
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Invest in a commercial property in Pune