Investing in office property can be a big deal. Real estate investment require great deal of attention calculate the its benefit as well as the loss side. With the positive sentiments in real estate, the commercial space is witnessing considerable high in demand. It not only assures a better rate of returns as compared to residential properties, the commercial property value experiences greater appreciation as compared to residential ones. But while buying a commercial property, following factors must be considered.
Dishonest Schemes:
Commercial property market is, now, flooded with numerous lucrative offers that include assured returns to investors. Sometimes enticed with such schemes buyers use to buy such commercial spaces. At times, some Builder fails to fulfill their commitments and investors end up with much less income as assured. Secondly investing in office property and any other likewise projects at preliminary stage involves higher amount of risk because the project may get delayed due to delay in approvals or so.
The Risk
The amount of risk is inversely proportional to the development of the project i.e. the amount of risk is highest at the initiation of project and starts diminishing as the project progresses. So, the risk factor is maximum when the project is under construction; minimal when the project is completed and no risk when it is rented out. Hence, investing in under-construction residential property involves huge riskk while real estate investment in case for office property in particular involves diminished risk. But at the same time, a building with a tenant on lease is not 100% risk free as the tenant may vacate the property and you may be able to find soon another tenant. In such cases, the property will remain vacant and you will lose upon the amount of premium paid for that property over an under construction one for that period.
Due Diligence
Any project that has a huge scope of proposed infrastructure has a huge potential of price appreciation as well. While choosing a commercial project with a view to investment, one must assure the project quality that must has well connected roads and highways. If you are investing in an under-construction project, you must ensure if the supply by the completion of the project is not greater than its demand as such circumstances will yield the returns much lower than expected.
Location
Location plays a vital role in quantum of appreciation of a property. The office spaces that are near or quite accessible from the commercial hubs are likely to yield more returns and is expected to appreciate better in terms of pricing as compared to others. The upcoming commercial hubs like Noida and Gurgaon where most of the MNCs look for the office spaces, to expand their operations have more rental value as compared to the adjoining areas Faridabad and Sahibabad. MNCs generally look forward to lease a commercial property instead of buying it hence the investor has a huge scope of earning substantial rental income by investing in office spaces in upcoming commercial hubs.
Transportation Accessibility
Another key factor determining the appreciation of an office space in near future is the transportation facility associated with the location of the project. Obviously, such locations have more worth than the remote locations and MNCs also prefer to hire such office spaces for the sake of convenience of employees. Employees have to travel every day to office, projects with good transportation accessibility plays a vital role in employee retention and thus this factor ranks high on the considerations while renting an office space.
Neighbouring Infrastructure
With major developments in neighbourhood infrastructure, the price of a commercial property is likely to appreciate in multiples. With better infrastructure, the commercial properties are able to draw attention from emerging MNCs that are looking to expand their operations and opting for renting office spaces. Like the commercial spaces in Noida and Gurgaon come with the infrastructural developments like Metro and multiple flyover projects which has surged the prices as well as demand for the office property in these areas.
However, each prime commercial space with prime location comes with a prime price. So, each investment avenue shall be compared on the basis of the amount invested as well as the expected return out of it. With the boost in commercial activities and higher prices of commercial segment, this sector is surely experiencing a huge potential of investment yielding rental income.
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