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7 Mistakes to Avoid While Investing Commercial Real Estate in India

7-mistakes-to-avoid-while-investing-commecial-realestate-in-india
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February 20, 2023
Market of India

Introduction 

Real estate is more of a science than an art, which requires careful planning and assessment to garner more returns. Suppose you are investing in commercial real estate. In that case, you must exercise extra caution because the investment ticket size is typically large, and numerous factors influence the returns and price appreciation in this type of property.

Changes in government policies and market fluctuations play a significant role in determining commercial real estate success. Chennai’s urban landscape is rapidly shifting, spearheaded by several developmental projects and top-notch facilities. Research profoundly regarding the following factors: 

  • Connectivity or proximity to public transportation
  • Amenities and future-ready features
  • Upcoming future developments 
  • Proximity to hospitals, metro stations, etc.

Benefits of Investing in Commercial Real Estate

investing-commercial-realestate

1. Income potential

The best reason to invest in commercial real estate than residential rentals is earning potential and favorable returns. Commercial properties typically have an annual return on investment of 6% to 12%, depending upon the market size, economy, facilities, and other factors. 

2. Flexibility in lease terms

The leasing factor is one of the significant benefits of investing in commercial real estate. 

3. Ensures steady flow

Commercial real estate investments yield more income than other investments. 

4. Offers excellent appreciation value

With proper asset management, commercial properties offer excellent appreciation value to realtors or investors. 

5. It is a secured investment

Buying the commercial property in the right location to avoid loss of cash flow for investors has proven to be one of the secure investment options. 

Mistakes to Avoid While Investing in Commercial Real Estate in India

mistakes-to-avoid-while-investing-in-commercial-real-estate-in-india

1. Not surveying the property completely

Whether it is commercial or residential, it is essential to survey the property thoroughly, understand the pros and cons of investing in them, and evaluate the returns accordingly. Check for repairs and several damages in the building before investing. Failing to research a property will cause a considerable fortune, as it might hamper the developments in the area. 

  • Check for the nearby amenities and facilities
  • Check for proximity to nearby public transport
  • Choose the right location with potential returns
  • Ensure to gain other investors’ testimonial research

2. Not knowing the correct property value

It is pivotal to check the right property value, whether it is residential or commercial investment. You can contact other real estate brokers and gain valuable testimonials regarding the property’s potential. Investments can be for both long and short terms, and assessing these things inevitably necessitates some degree of conjecture and prediction. However, failing to make long-term and short-term value assessments will impede your finances and leave you in a difficult situation if things go your way.

3. Not selecting the right location for your commercial space

The location of a commercial property determines its demand. This, in turn, increases the property’s value and rate of return. As a result, as an investor, avoid falling for flashy properties in poor locations. This results in poor capital growth for your property, forcing you to incur losses. Before investing in a commercial property, it is vital to have an investment strategy that can generate better returns. 

4. Hidden charges not determined

Several hidden fees are hidden in the property documents by the seller. It may include statutory or local taxes, which the seller must pay. Proper documentation and necessary checks are vital to determine the hidden charges. Proper screening, legal documentation, and paperwork are essential to assess the results accurately. 

5. Ignoring other investment options

Due to a lack of experience, and knowledge, most novice investors prefer to ignore other investment options that offer the best amenities, location advantages, tax advantages, and potential returns. Consider purchasing a commercial property that has a huge demand, with other civic neighborhood amenities. Consult to seek expert’s advice, and ensure to implement them accordingly. 

6. Not checking the builder’s reputation

The legality of your investment will be ensured by selecting a trustworthy and reliable real estate developer. A reputable real estate company will obtain all necessary legal authorizations and papers to sell real estate. Browse the corporate website, social media profiles, and project sites to get a complete picture of the developer.

 You could also solicit feedback from previous clients or buyers to assess the builder’s reputation. And not performing the following steps can cost you a fortune. Once you’ve narrowed down your options, consider factors such as geographic advantages, land value, rental demand, road accessibility, surrounding amenities, builder’s history, and so on.

7. Not estimating your financial capability

Nothing is more important than analyzing your financial situation when making a new investment. In addition to the significant property costs, taxes, and registration fees, there are numerous other hidden costs associated with real estate investing. It is vital to check your financial capability and get the aid of real estate professionals to give you the best advice on commercial properties. 

Mistakes to Avoid Investing Commercial Real Estate in India

  • Income Potential : 2
  • Flexibility in Lease Term : 1
  • Not Selecting the Right Location for Commercial Space : 0
  • Not Checking the Builder's Reputation : 1

Total Votes: 4

Why Choose Market of India for Commercial Real Estate Investment? 

Market of India, India’s largest upcoming wholesale and retail market, is prominently known for commercial properties and top-notch amenities. We have diverse commercial spaces with world-class infrastructure, including retail, wholesale, and office spaces.

  • 5000+ shops under a single roof
  • 1,00,000 + commodities
  • Nine unique markets 
  • 20+ ancillary services

FAQs

1. What should I be aware of when buying commercial property?
While investing in commercial real estate, there are several things to remember: location advantages, proper market research, legal paper framework, and proper property valuation before investing. 
2. What investment is preferable in 2023? 
The answer is quite simple–commercials are the best investment for 2023. More specifically, the best types of real estate investment are long-term and short-term commercial properties- for example, office purposes. 
3. What affects commercial property value?
Each approach (cost approach, sales comparison approach, and capitalization rate approach) estimates the value of a property at a specific time.
Market of India is India's largest upcoming wholesale and retail market in Chennai. We are known for having markets and office spaces with world-class infrastructure and ancillary services. We aim to offer traders a wide range of options for commercial spaces.

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