How to Increasing demand for commercial property in India...?

The real estate sector has been a major contributor to the growth of the entire economy and is expected to contribute in approximately 13% of the country's GDP over the next 5 years. If we talk about improving the business environment, then the commercial real estate sector can be considered a major beneficiary. The sector has been promoted with government initiatives such as RERA and GST, which allowed large institutional investors to make large investments in commercial property in India, thereby improving the overall business conditions of the country.

The continued expansion of the service sector has led to the increasing demand for office spaces and thus can be considered as one of the major growth factors of the commercial real estate segment. It is estimated that the average demand for office space across India will increase to 46 million square feet by 2021.

Policy reforms such as REITs (Real Estate Investment Trusts) will further promote the development of the commercial real estate sector by reducing the burden of capital costs of projects financed on real estate developers.

Increasing FDI in the e-commerce markets has fueled the growth of the warehousing and logistics sector and further increased the demand for commercial space benefiting the commercial property sector in India.

The retail space is also expected to witness strong growth in the coming years and is expected to grow at a rate of 25% to 30% in the next financial year. Finance Minister Sitharaman's Budget 2020 has also brought some good news for the commercial real estate sector. Establishment of new smart cities, development of around 100 new airports across the country, formulation of national logistics policy, announcement of National Infrastructure Pipeline will likely increase the demand for commercial real estate sector especially office segment.

Buying a Commercial Property That Guarantee Success and Prosperity

The real estate market in India has grown by leaps and bounds since the implementation of RERA, Smart City Mission and Start-up India Mission. These schemes created high demand for commercial establishments. As the Indian population is growing rapidly, the demand for commercial real estate will never decrease. Therefore, investing in commercial properties can help you achieve a higher return on investment. Okay, investing in a commercial real estate can be a bit scary because you need to invest more money. But with a few simple tips in mind, you can invest in a property that will help you emerge successfully.

1. Research the market

Before investing in real estate, you need to pay attention to market trends. Also find out what kind of qualities are in high demand. Before deciding on what to buy, you need to analyze the scope of future development in the regions.

Buying a property in a developing area is much better than buying a property in a well-established location. The former choice is cheaper and it gives you a higher return on investment.

2. Consult a financial expert

When you have no prior experience in this area, it can be difficult to estimate the exact cost of purchasing a commercial actual. Therefore, before purchasing a property, you should consult a financial advisor and plan your budget accordingly. Tax implications can be complex to analyze in a real estate transaction.

3. Analyze your financial situation

Before investing in a commercial establishment, you should analyze your financial situation. Make sure you will be comfortable paying its EMI, even if there is no rental income from the property. Also, before purchasing a property, you should analyze the scope of income from it. In addition, you should also calculate the risks involved in the entire business.

4. Plan your layout well

Whether you are building an office space, shop, mall, or simply renovating it, the layout has a big impact on operational efficiency. This will directly affect your scope of making money by rent or reseller. Therefore, you should prepare a smart plan to refurbish or design the property. Seek the help of an architect if needed.

5. Choose the right builder

You should always buy a commercial property from a reputable builder. Therefore, does a background check of the builder and take a review from those who have purchased the property from the builder. Also, make sure the builder is specialized in the field. The history of a builder should also be considered in the context of the completion of the project.

Residential vs Commercial Property: Which Should You Choose for Investment?

Residential and commercial properties have certain properties and demerits. Residential properties are used for personal purpose as well as long-term investment, while commercial properties are good for achieving high rental returns. However, they may be more expensive than the former. So, what would be the best for investing and generating high returns? Let us know the answer to this question in this article.

Good rental income: People who believe in investing in real estate always think of generating high returns from it. Commercial properties such as office buildings, warehouses, industrial units and retail spaces are great for making some rental money. Similarly, you can rent your residential property to earn some extra income. It has always been found that commercial properties are always good in terms of making some passive income rather than residential properties, especially during a recession. According to research, you can earn 1-2 percent of rental income through residential properties while commercial property provides you up to 5 percent of rental income. With the increasing development of residential units, the rental market is losing its charm which is reducing the annual profit.

When investing in commercial property it is advisable to examine all aspects such as current leasing environment, clearance, legality and distance from complementary industries. Whereas you should consider some important facts about the residential property that you want to get as its neighborhood, surroundings, and infrastructure and neighborhood property prices. These factors will help you generate a good rental income through investing in the real estate sector.

Risk Factor: Commercial and residential properties that are leased out, asking to tax the income of the property. The risk of investment is always higher in the case of residential properties as they are leased for shorter terms of lease and bring higher maintenance and maintenance costs. Whereas commercial properties provide continuous and long-term rental income. If a commercial property falls under Grade A, there is a possibility that it will generate more rental income than investment in residential properties. Commercial property always gives good rental income on investment unless it is in high demand where operating expenses are at a minimum.

It would be nice if you hire a professional property manager who can help you and help you manage everyday affairs and reduce expenses. However, it can cut down on income from your property. In addition, you will need a larger amount to pay in advance than residential property.

Development Scenario: According to reports, India's first Real Estate Investment Trust (REIT) will give better returns to property buyers and investors, while residential sector will be the first choice of the people. The market was believed to be sluggish, but after the introduction of the Real Estate (Regulation and Development) Act (RERA), and the Goods and Services Tax (GST), the market would again retain its position.

And there will be demand for commercial market after sector for investors. Before making any investment such as its location, size of investment and duration of investment, make sure you go through all aspects of the property.

Hidden facts about Real Estate (Regulation and Development) Act – RERA

The Real Estate (Regulation and Development) Act is fully implemented. The major implications of RERA are summarized below, for the understanding of a person who is not part of the real-estate sector.

Any project up to 500 square meters, and more than 8 units (flats / apartments / personal properties) that are under construction, will have to be registered under RERA.

This means that most, if not all, of the ongoing projects will be officially looked into under RERA.

Every project detail has to be registered. This includes project layout, planning, government approval, land title status, subcontractor of the project and completion schedule with RERA. It has to be presented to the consumer. Each phase of a project will be considered a stand-alone project and will require related permission.

In this way, RERA will be updated with all real estate activity which will help increase transparency and streamline the sector.

Under Section 9 of the Act, all agents and brokers have to register with RERA within three months of the implementation of the Act.

As a result, house buyers will only deal with agents and brokers who are qualified, verified and authorized.

The sale of any project will be on the basis of its original carpet area and not on the super built-up area.

Buyers will get a clear understanding and will be able to make an informed decision when purchasing a property.

Once a particular project is registered and sold, no further changes can be made without the buyer's consent.

This will eliminate the cost of fluctuations after the sale is completed. In addition, it will ensure that projects are delivered on time.

The developers will be liable to pay interest on the amount paid by the buyer if the project takes longer to complete than promised.

This law will ensure that projects are completed and delivered without any delay.

Separate accounts have to be maintained for different projects of the same developer. 70% of the client's money will be used to build related projects.

This will help in regulating the transaction. The customer's money will be used fairly and appropriately for the development of their homes. It will also assist in timely delivery of projects.

In case of any damage, the customer can contact the developer in writing within 5 years of being taken possession.

This will ensure the safety of the customer even after they are assigned to the project.

Under this Act, the Real Estate Appellate Tribunal is constituted. These tribunals will decide on disputes between buyers and developers within a time limit of 60 days.

This will speed up the resolution process.

For the developer who fails to follow the law, the maximum is 3 years without jail / fine.

Therefore, the law will have to be strictly followed for everyone in the industry, making it customer-friendly.

RERA project deadline to bring relief to developers, relaxation to house buyers interests

Although MSMEs, NBFCs and HFCs were the main focus of the Finance Minister's address, the real estate sector also received a major boost from the announcements made by Nirmala Sitharaman on Wednesday. Giving a major relief to real estate developers, FM extended the timeline for completion and registration of the project by 6 months.

The move will help the developers immensely as construction activity is grinding across the country. The wait for house buyers gets a bit long, but it was inevitable.

Including COVID-19 in the definition of “Force Measure” or “Act of God”, and the State / UT Regulatory Authority to revise the lawsuit on the moto and the date of registration and completion of projects by 6 months, in advance there is a boost for the sick. It is slated to combat disruption caused by epidemics. "This will not only provide more time for the project to be completed without any obligation for delay in completion of the project, but also prevent them from facing legal matters due to delays limited to this 6-month extension window. Will give,” a tax expert said.

While COVID-19 dissemination has been challenging for many sectors, including real estate, with many research reports in this area it appears encouraging that real estate is still considered the best investment option. This will be further strengthened by the Finance Ministry with various liquidity measures that will help reduce the rigidity currently being seen in the Indian real estate market.

In addition, the announcement of Rs 30,000crore special liquidity plan for NBFCs / HFCs and MFIs will ease the liquidity misery of stressed stakeholders. This would greatly benefit the real estate sector, given that NBFCs and HFCs are its main lenders.