Overall growth

The economic scenario of a city plays a huge role in determining the prospects of its commercial realty. In most cases, commercial realty only flourishes in places that has a good residential market. However, there are many towns in India, where the commercial realty is faring better than residential real estate. Factors like employment options, infrastructure initiatives and rate of urbanisation also impact commercial real estate.


Prime location

Obviously, investing in a commercial property in a prime location can have multiple benefits. According to Ramesh Nair, COO - Business and National Director, JLL, India, a commercial property in a prime location has the following benefits: I It is easier to find tenants for properties in prime locations than in low-demand locations. Finding tenants quickly is important, since it plays a role in yield calculations. Leaving a commercial property vacant for extended periods will result in loss of income.

Banks are more willing to give loans to commercial projects in prime locations, since there is very low likelihood of capital loss.

It is easier for employees to travel to work every day - a major factor, considering that employee retention ranks very high on employers' list of priorities today.

He further adds that a prime office space purchased for self-use is arguably the soundest business decision any firm can make. Apart from the fact that such a property is extremely convenient to commute to, a commercial office in a prime location increases a firm's visibility and reputation. It is a visible demonstration of your firm's commercial worth to your clients, partners and other businesses. Also, the capital appreciation of a prime office property reflects very favourably on a company's balance sheet.

Property management

Property management is becoming one of the crucial issues in case of commercial property. This is more important if a person is not using the property for self-use. A commercial property that is managed by a good firm gets more tenants and is better maintained. Nowadays, many malls and big shopping spaces are managed professionally by agencies to attract better investors and buyers from different sectors.


Technical specifications

A commercial property needs to be technically sound in terms of construction. It should also have all the safety measures in place. The facade of the building has to be attractive enough to get eyeballs. The layout should facilitate business in terms of adequate parking, godown facility and warehousing. The building should also be eco-friendly in terms of consumption of water and electricity. Green office or commercial buildings are in vogue abroad.


Miscellaneous

Making money from a commercial property is not as simple as it seems to be. If an investor is look-ing at an income producing office asset, he should look at:

The break-up of cash flows

The vacancy factor

Expenses such as maintenance, property tax and building insurance

Lease term, lock-in period and expiry dates 

Long term capital appreciation potential

Refurbishment, refinancing and repositioning potential

Real Estate Team: Mukesh Sharma, Rajesh Vishwakarma, Santosh Deshpande, Shibi Sathian, Murlidhar Redkar 
Edited by: Urmilla Banerjee, Shameem Khan 
Designed by: Hemant Lambe