Look out for the benefits of investing in Commercial Property

Any talk on real estate investment, on a normal day, will draw an easy reference to investment in residential properties. A large section of the people have subscribed to the idea of real estate investment being synonymous to investment in residential properties. The marketing spotlight on luxury residential properties, along with the media interest in the burgeoning prices has made this school of thought popular among many.

The alternative option of investing in commercial property has been an alien concept. Despite their scanty popularity, commercial property investments come with their set of advantages that are quite appealing to anyone willing to educate themselves about the same. However, it is important to understand the need to opt for BMRDA approved plots to prevent any registration issues. Any willing buyer interested in investing in commercial property in Bangalore can go for plots in South Bangalore or plots in Electronic city Bangalore.

One of the most pronounced advantages of investing in commercial properties is the considerable hike in rental returns. Proprietors have known to earn a good 7% to 10% rental returns on these properties, with industrial properties fetching an even higher return. As opposed to residential property returns of 3% to 5%, this definitely seems like a good catch.

Industrial property returns can be easily north of 9% or 10%, making it a strong contender in the commercial property segment.

Residential property, more often than not, has a lease that does not stretch further than a year or two. In comparison, commercial property will have a longer lease that can mean better returns over the years and a more steady investment value.

When a commercial property is leased out, the responsibility for maintenance, insurance, and the other expenditures are on the lessee, hence, the property owner has the sweeter end of the deal.

Parallely, there are certain cautionary details that the proprietors need to keep in their minds. Longer commitment levels on rental agreements warrant longer vacancies. Goods and Services Tax (GST) applies to commercial properties on purchase and rent. As opposed to residential properties, the value of commercial properties is likely to all in value owing to the non-availability of tenants.

Although it is obvious that commercial property investments are not completely risk-free, they do come with a good fraction of advantages that need consideration. It is wise to be aware of all the phases of a property cycle which include the growth in prices, peaks, moderations, and stagnations. This will help any potential property owner make informed choices.