Know This Before Commercial Real Estate Investing
You may think that commercial real estate investment is a challenging proposition. That is not true and you can even earn high returns by following the principles of long-term investing. Some of the aspects you have to keep in mind are:
#1: Location of the commercial property
Location of the commercial property you are planning to buy is one of the most important aspects to be borne in mind. This is because investment in a commercial property pays back in two ways: capital appreciation and rent. You should look for a location wherein the vacancy rate is below 5 percent so that supply remains in check. This will help you to get higher rent and enjoy capital appreciation. If you are looking at commercial space for sale in Bangalore, then you must visit www.hebronproperties.com.
#2: Quality of commercial property
In the case of two buildings in the same locality, one that is better in terms of quality gets rented faster without a doubt. In addition to attracting better quality tenants, the commercial property will fetch higher rent and enjoy better capital appreciation. Multinational companies are always ready to pay a premium for quality spaces. Therefore, you should look for LEED gold/platinum certified properties or those with nice lobbies, higher ceilings, better views, and more elevators or lifts. There are several commercial spaces in Bangalore that satisfy these conditions.
#3: Supply and demand for commercial property
This is by far one of the most important things you should analyses as a savvy investor prior to committing to purchasing a commercial property. In every city, there will be many micro-markets and Bangalore is no different and each of them has a certain number of commercial spaces that have already been leased and spaces that are getting ready. Top brokers often publish annual demand statistics.
The rents, as well as prices, would drop if the yearly supply for the next 2 to 3 years exceeds the historical demand. If the supply is disproportionately higher, the rents of both new as well as old buildings will be impacted. While new buildings will not fetch higher rents in view of the availability of options, renters in older buildings often renegotiate rents and/or escalation clauses.
This is not all that you have to keep in mind when buying a commercial property in Bangalore. There are other aspects as well. They include market rent and in-place rent, quality of the tenant, interior fit-outs, base rents and fit out rents, lease structure, and security deposit, among others.