Maxworth Realty Reviews - Benefits of investing in commercial real estate over residential real estate

 

Last year, when COVID-19 gripped the nation leading to a lockdown, uncertainty in equity markets and low debt market returns turned many investors to other investment options, and surprisingly the Indian real estate sector took 5 Billion USD did not attract. Institutional investments in 2020, equivalent to 93 percent of transactions recorded a year earlier. 

Maxworth Realty Reviews that we Indians have always had a soft spot for two investments – gold and real estate. And when it comes to property, residential real estate remains a hot topic because of its homeownership sentiment. But as of late, many investors are finally seeing the potential of commercial properties and the many benefits that come with them.

It is important to realize that even though there are thousands of residential properties with attractive offers, as an investment they do not offer as high returns as commercial properties and carry their own risks.

So, let’s look at some of the reasons why investing in commercial property instead of residential real estate can be a wise decision.

Higher returns

Commercial property gives good rental returns in the long run. Since the residential market is yet to pick up momentum post the pandemic, it will take some time for the prices to appreciate. Whereas, in commercial real estate, Grade-A office properties are already giving high returns due to their high demand. Estimated returns from residential properties are around 3-4%; Whereas, from commercial properties, it is around 8-10%.

Budget 2021 has also relaxed debt financing norms for Real Estate Investment Trusts (REITs), and this could pave the way for institutional funding in commercial real estate properties and help investors earn higher returns.

Growing demand

work from home will not be the new normal in India. Due to large family sizes, tiny homes, inconsistent internet speeds and weak digital platforms, most people are choosing to go back to the office.

In addition, the emergence of new businesses registered year after year is driving the growing demand for commercial properties. According to the Central Registration Center, about 16,000 new companies have been registered since the lockdown. Apart from start-ups, MNCs are looking at India as a hub for data center offices and are looking for larger commercial spaces, especially in Tier 1 cities.

“Bengaluru has retained its premier position as the city registering the highest office leasing volume in the country. The city recorded office leasing of 7.54 million sqft which accounted for 34 percent of the overall volumes across the eight markets in India.”

Steady cash flow

The lease term of commercial properties ranges anywhere between 2 years to 10 years. There are many advantages to having such a long lease period. Firstly, you will always have a steady cash flow due to regular rentals. Second, you won’t have to worry about looking for tenants every few months.

On the other hand, residential properties suffer from uncertain cash flows due to short lease periods. In most cases, the lease is for 11 months only.

Easier maintenance and upkeep

Whereas residential properties invest a lot of money to offer attractive lifestyle amenities such as swimming pools, children’s play areas etc., commercial properties focus on facilities that can enhance work capabilities and lead to a healthy and positive functioning at work. environment can be created. Therefore, due to less number of larger-than-life features as compared to residential properties, the cost of maintenance is lower in commercial properties.

Furthermore, unlike residential real estate where the owner is always responsible for the maintenance of the property, in commercial real estate it is the tenant who bears the maintenance burden.

Another advantage of Maxworth Realty India Reviews is the triple-net lease. It is a form of lease agreement where the tenant is responsible for any ongoing expenses of the building such as maintenance cost, taxes, insurance etc.

At the end of the day, real estate remains one of the strongest and most promising investment options, and with the pandemic slowly coming under control, the market is bouncing back in most of the metro cities.

Maxworth Realty India Reviews was conceived in a 600 sq. ft office, humble beginning at best. Leveraging on the growth of the IT sector, we soon became a family of over 500 employees, spanning across multiple offices, and is now considered as one of Karnataka’s largest developers, with more than 18 live projects. Maxworth Realty Reviews have now reached cities like Hubli, Hassan, Shimoga, Mysore, Bijapur, and Ooty which are soon to be “Smart Cities” and revered holiday destinations.