What is commercial Real Estate?

Commercial Real Estate is used to generate income. Basically it is used for business purpose. Due to high rates of these commercial properties, most of the business entities occupy the space on lease/rent. Investment in commercial property is a good option to produce lot of money for long term.

Commercial real estate property can be divided into categories such as:

RETAIL (These types of properties are used for selling of consumer products purposes)

Retail Space | Hotels | Restaurants | Malls | Shopping Centers | Public Houses | Shopping Complexes | Medical Centers | Convenience store | Shopping Store | Outlets | Bazaar Shops | Shops | Showrooms, etc.

OFFICE (These types of properties are used for setup offices)

Office Space | Office Buildings | Office Complexes | Office Parks, etc.

INDUSTRIAL (These types of properties are used for manufacturing, distribution and storage purposes)

Warehouses | Garages | Distribution Centers | Gas Station | Industrial Buildings | Godown | Industrial Plots | Industrial Constructed Sheds | Factory, etc.

INSTITUTIONAL (These types of properties are used for educational purposes)

Institute Spaces | Training Centers | Coaching Centers | Schools | Colleges, etc.

HEALTH (These types of properties are used for healthcare purposes)

Hospitals | Clinics | Labs | Nursing Homes | Fitness Centers | Ayurveda Centers | Spas, etc.

Usually an investor owns the commercial property and gives it on rent to business entities. Investment in commercial real estate is not a cakewalk. It requires more analysis, research and planning before buying commercial real estate.

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Commercial Real Estate

Differences between Commercial & Residential Property Investment

Differences between Commercial & Residential Property Investment

Commercial Property completely differs from residential property. The buying process, rates, rules, benefit, profit, policy, terms, locality, and formalities of commercial properties are different from those of residential properties. So, before investing in property, you should know all the pros & cons of both types of the property.

Investment in commercial property is full of exciting opportunities of profits. The basics of investment in commercial and residential property are same. Below are some key differences in commercial and residential properties:

Rent/Lease Period:

Commercial property can be rented out for longer period rather than residential property, which gives a certainty of rent income for long time. Commercial property can be leased or rented out for several years rather than 8-12 months. Commercial property rent tends to be reviewed annually, which gives an opportunity to increase rental income. The tenant for residential property can be found easily without waiting for long time. In case of commercial property investor has to wait for long period to get tenant for the property.

Tax on Property:

GST (Goods and Services Tax) have to be paid when buying a commercial property, but investor can recover this tax by including it in rent price of the property, Means, investor can impose this tax on tenant of the property.

Maintenance Cost:

The maintenance cost of commercial property is paid by the tenant, means landlord gets the complete profit of rent. Landlord/investor can impose this cost on tenant. As investor you must be sure about the maintenance cost so that there should not be any future dispute regarding the cost. in the case of residential property mostly everything is fixed in the rate of property rent.

Locality of Property:

The location of commercial property and residential property differs a lot such as location requirement of commercial property includes good transportation, big parking space, availability of manpower, easy communication, etc. But, when we talk about residential property, it includes amenities like park, schools, hospitals, consumer market, malls, security, transport, etc

Property Loan:

Process of getting loan for commercial or residential property is not similar to each other. Loan for commercial property includes various requirements, TC and policy. The interest rate of commercial property is also higher than residential property. Commercial property loan process is much time consuming, you need to map out your time before apply for loan.

Initially you need to a property so that you can invest at right place. Analysis of all differences between commercial and residential property must be done if you are confused with your investment decision.

Renowned property dealers of metro station can turn out to be an expert of real estate sector. Consultation with those property dealers cans strong your decision power of buying a property.

This post is only informative, it doesn’t relate to any legal advice.

Commercial Real Estate

Commercial property is basically a compilation of four major categories, Retail, Office, Industrial and Multifamily. Various kinds of properties come under these categories such as, office, medical store, retail shop and even a rented building. But in short any property that generates profit out of its use is a commercial property. So, any landlord that gives his property on rent that also falls under the commercial property.

Every businessman wants to own a commercial property for the expansion of his business. But to arrange a commercial property in India is not so easy and especially during the time when US is going under the recession and Europe is loaded with the highly over leveraged debt. Whether it is Indian investor or the foreign investor everyone is wary because of the unambiguous government policies and lack of transparency in the real estate sector.

Twocircles.net reports that Real Estate sector has not yet recovered completely from the impact of the Recession 2008-09, whereas it has again undergone a slowdown due to high interest rates and prohibitive property prices. The RBI has also hiked the housing loan interest rates. So, most of the property buyers have postponed their plans to buy the new property.

Due to high property valuation, Foreign Direct investment (FDI) has also slump down to 2.97 percent from Rs.121, 000 crore in 2010-2011. All the major banks have shut their doors for this industry. The slowdown in the FDI is really an issue of serious concern for the commercial real estate market.

According to the report of Economic Times, Real Estate sector, instead of 15 percent growth, will not exceed more than 10 percent in the coming years. The property rates are so high and even the taxes on the construction is so high that government really needs to think over the prices otherwise this sector can really face troubles in the coming years. However, if you want to buy a commercial property then there are some experts like CCIM (certified commercial investment members) who can assist you in acknowledging the market position so that you could arrange the best property at most equitable prices.

Before buying commercial property you need to consult with any real estate agent because these agents are well capable to consult you and review the property for you, they have good knowledge about commercial real estate.