Commercial properties in peripheries to reap healthy ROI


Commercial properties in peripheries to reap healthy ROI

Price competitiveness and growing demand for commercial properties in city peripheries have given a thrust to the investment potential in these areas. Investors can eye healthy capital as well as rental returns from these locations.

The government is taking several initiatives to boost business and investments in Indian real estate and construction sector. Under such a scenario, industry experts are positive about the return on investments (ROI) from commercial properties, especially office spaces. Trends indicate that peripheral locations of major Indian cities such as Delhi NCR, Mumbai, Bangalore and Chennai have the highest potential to reap ROI, both in terms of capital appreciation and rental yield.

Sanjay Dutt, Managing Director, India, Cushman & Wakefield reiterates, “As more number of companies, especially in the IT/ITeS sector, look to either consolidate or expand, they are favouring locations where they can have larger offices in modern and well-maintained buildings. Currently, the upcoming supply of commercial properties in Delhi NCR, Mumbai, Bangalore and Hyderabad is planned and available in peripheral areas.”

The major factors triggering a shift in demand towards the peripheral areas are affordability and newer constructions with advanced facilities. Rental yields in such locations are better owing to steady demand and stable rental values. Giving a perspective, Aditya Vora, Director, Adytum Designs says, “Gross rental yield from commercial office spaces in the central business districts of Mumbai has dropped in a span of one year, whereas, the yield in the secondary business districts has witnessed a hike. This is due to high demand in the suburban areas which is backed by availability of residential properties. Growing infrastructure, competitive rates and the need to decongest cities have pushed both commercial and residential markets to the fringes of the city, owing to which, both demand and supply are now concentrated in these areas.”

Apart from the Make in India campaign and REITS (Real Estate Investment Trusts), the latest relaxation provided in the Foreign Direct Investment (FDI) norms has further given an impetus to industry experts to stay positive about investing in peripheral areas. Sachin Sandhir, Global MD – Emerging Business, RICS says, “This initiative will drive the entry and growth of smaller development firms in Indian real estate. Projects in semi-urban and peripheral locations of all tiers of cities can now be successfully implemented at a large scale. Low land prices and total capital investment requirements in these areas are relatively attractive for both developers and investors.”

Thus, if you are looking to invest in the commercial market of India, consider moving to peripheral locations where rapid business growth is expected in the coming time.