How to Invest in Commercial Real Estate in Noida
Updated: Oct 3, 2020
In this article, we will discuss how you can invest in retail and office spaces in Noida. We will also discuss what type of returns you can expect in the shop or office and how to target tenets for your office space.
Typical Commercial Properties
There are two types of commercial properties: retail commercial property and the second one is office space.
Types of retail commercial properties are as follows:
Small shop: small shops are 100 to 500 square feets shop, Which can be located inside the mall or market.
Midsize showrooms: Midsize showroom size can be 500 to 3000 square feet.
Large Retail Spaces: large retail spaces are more than 3000 square feet whare large retail chains buy or rent them for there retail stores.
Types of office spaces are as follows:
Small office spaces: small office spaces are the same as small shops. The size of small offices is 100 to 500 square feet.
Midsize offices: midsize offices are 500 to 3000 square feet offices. Grade B and Grade C type of offices come under the midsize office spaces.
Large office space: Large office spaces are more than 3000 square feet. Big companies, developers, and corporates invest in large office spaces.
Salient Features of Retail Property Investment
footfalls are the most crucial factor in rental property investment. Rental proximity residential area, metros, business districts create high footfalls.
Tenant and Occupant Mix:
A good tenant and occupant mix can help you to grow your business rapidly. For example, occupants in a mall or market should complement each other to attract more footprints.
As we all know, front-facing and ground Flores are comparatively expensive. And two sides or three open side spaces are more expensive than other shops. A premium of two sides and three size open spaces are 50 to 100% costlier.
Long Term Lease:
Retail and office space lease is always very lengthy. In retail, typically, the lease is 3+3+3 years. Rent can be re-negotiated after three years.
Expected returns in retail spaces can be 8 to 12%. Expected returns are higher because the vacancy rate is higher in retail space.
Salient Features of Office Space Investment:
Connectivity is a crucial aspect of office space investment. Each company looks fook for proximity to the airport, metro, and road.
Most of the business wants to do business with each other hence they invest in a business district like CBD, SBD, PBD. If you invest near the business district, then you can get maximum returns.
Big floor plates fetch interest form large corporates. You can also invest in virtual office space. You can divide prominent floor places, but you can not increase the floor plate; hence, always invest in big floor plates.
Long Term Lease:
Leases in offices are typically very long. Leases can 3+3+3 or 5+5+5 years. Means lease can be negotiated after 3 or 5 years. Office spaces can give you long term returns as compare to commercial offices.
The expected return in office spaces is comparatively less. Expected returns in office space are 6% to 10%. The expected return is less because leases are long in the office spaces. So as investors, small and mid-size offices are the best suit for individual investors. Large office spaces are managed by developers or big corporates.