Investment in Commercial Real Estate: Made for Exponential Gains
Introduction:
Within the never-ending dynamism of real estate investing, success most often comes from riding the right wave. Picture the Indian commercial real estate market as a vast ocean, whose ebbs and flows present opportunities and challenges that create a complex, yet alluring seascape. As an investor, you need to learn how to navigate them perfectly, taking full cognizance of the fact that time is your safest bet towards getting your bearings straight.
Why is CRE an attractive investment?
India’s economic trajectory is truly game-changing, and it is projected to become the world’s third-largest economy by 2029. This explosive growth has had a significant impact on the Commercial Real Estate (CRE) landscape, creating significant windfalls that are worth exploiting.
Being a multifaceted gem, CRE brings the promise of high mortgages, high demand, and unwavering stability, attracting investors seeking refuge from volatility in other forms of investment. CRE is not just an investment; it is a sanctuary, offering consistent returns, capital preservation, and diversification. Innovation has further democratized this space, inviting a large group of investors to participate in its promising future.
Now for a more substantive proposition, that can actually help you in realising your goals, let’s deep dive into some of the more proactive trends dominating the market right now.
Key Trends
- REIT
Picture a REIT (Real Estate Investment Trust) as a guiding CRE investment. They pool resources from multiple investors and sail together into a profitable real estate venture. REITs do not require investors to own a ship; they can ride the wave of co-funding, for optimised and almost guaranteed returns.
- DESH Bill
The Development of Enterprises and Services Hub (DESH) Bill promises to rewrite the script for CRE and REIT players. This reform bill seeks to break down barriers around SEZs and usher in a new era in the market that investors can seamlessly engage in. It aims to provide tax benefits and incentives for commercial real estate in SEZs, potentially making this oppurtunity truly lucrative.
- Fractional Ownership
With fractional ownership, Investors can view commercial real estate (CRE) in a whole new light. By buying piecemeal into a truly attractive property, they not only ensure a steady income inflow but also get the chance to truly exploit its value in the long run. Investors can also diversify easily without putting all of their money into a single asset, thereby paving the way for a more spread-out portfolio.
- Virtual Property
Virtual space investing brings a new transformation to the world of commercial real estate. Investors become registered owners of a facility without physical responsibility for maintenance. This idea is possible in Metaverse, with its thriving digital real estate market. Thus, for example, many investors have bought land in Decentraland, a major player in this space. Due to their ease of replication and modification, Metaverse virtual properties are truly adaptive and scalable without being unburdened by traditional rules and restrictions. This is a fad similar to cryptocurrency and is subject to its global undesirability by most of the central banks.
- Data Centers
Companies and consumers are using more data and digital services, increasing the demand for data centers. They are therefore a fantastic opportunity for real estate investors to expand into. One of the new asset classes in India, the data center can deliver a strong ROI and attract top tenants. Rates are higher and more expensive than other commercial real estate investments, leading to substantial gains, that simply are too good to ignore. Data centers are always leased long-term, providing a long-term and low-risk play, that everyone would appreciate. With growing digitalisation, this will only boom further, creating opportunities that one can definitely leverage.
- Warehousing
The rise of last-mile e-commerce and digital retail has transformed the warehouse subsector into a lucrative possibility for individuals seeking an entrance point into the commercial real estate market. In fact, according to the recent ‘India Warehousing: A Sunrise Sector’ report by CREDAI-ANAROCK, there is a huge demand for Grade-A warehousing facilities in India, paving the way towards a truly disruptive investment opportunity worth more than $3.8 billion that one can definitely tap into. Definitive trends like multi-modal and third-party logistics, along with policymaking support and increased non-metro demand, further make this asset class the ideal play to execute for a truly balanced portfolio.
Technology taking CRE to the next level
Technology controls the real estate transaction story in the digital age. Integrated building systems, artificial intelligence, IoT technologies, and other technological innovations align businesses, increase productivity, and provide valuable insights. Technology, in fact, provides investors with the complete investment roadmap, with easy communication and impactful analysis, paving the way for a truly efficient and transformative journey.
As we conclude this tour of India’s CRE landscape, I definitely believe that the overall game is more exciting and challenging than ever before. But at the same time, one should never forget that navigating through this world requires strategising, time, and prudence. Despite the economic woes, CRE’s prospects are expected to truly prosper and with a steady income, diversification, and inflation protection, this is one opening that you can’t afford to miss.
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