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Commercial Realty: An Opportunity for NRI Investors

New districts in NCR emerge as commercial real estate hub - RealtyMyths
“Commercial realty in India is gaining momentum; the boost in startup community and relaxation in FDI limits in retail laid foundations for its growth. These initiatives by the Union Government has brought in stability in commercial realty as well and boosted investors’ confidence”

commercial realty, JLL India, Anuj Puri, NRI Investor, RealtyMyths

Sahil Zaidi

Indian real estate market has always been lucrative for investors, particularly the NRI Diaspora in London, Middle-East and South-East Asian countries. With value of Rupee stabilizing around 65 per USD, it has now helped rule out speculations from the market as well. The recent initiatives by government have also brought in stability and boosted investors’ confidence. Creating separate funding options for the startup community is another aspect which is going to push commercial realty market to the next level. These developments, combined together, make a great deal for NRIs to invest in India commercial realty.

Commercial realty in India is gaining momentum; the boost in startup community and relaxation in FDI limits in retail laid foundations for its growth. In a report Anuj Puri, Country Head and Chairman, JLL India said, “India is already host to some of the largest global e-commerce players. The announcement that 100 per cent FDI will now be allowed in e-commerce is going to open the floodgates to a host of other players in this segment”. Indeed, a NRI looking for investment opportunities in India must consider commercial realty space.

However like any other investment, there are some checkpoints that an NRI must do before finalizing the deal. NRI looking for investment in commercial realty in India should consider these points:

One of the key factors which decide the pace of growth a property can achieve in a stipulated time frame, location in indeed crucial. An NRI investor should crosscheck the demand and supply matrix of properties in that location. You can check this by analyzing the economy, population growth and the job market in that location. Currently, Delhi NCR, Mumbai and Bengaluru are doing well in commercial realty space.

Size and Category
The commercial realty has different segments; office and retail spaces are two main segments. These days, developers are focusing on Integrated Commercial Properties which comprise both and the serviced apartments as well. An NRI investor can look for those commercial properties. Also, developers are coming up with smaller size options as well. This makes ‘hedging’ possible in commercial realty investments. An NRI can mix and match sizes in different properties to safeguard their investment.

Expected ROI, Assured Returns Schemes
On an average, commercial realty investments get a return of 10-11 per cent per annum. This may vary by 2 per cent based on the location. As per experts, an NRI should park at least 4-5 crore for at least 5 years to let the capital investment appreciate.

An NRI investor should also consider the rental income those investments can yield for them. This is a very important aspect and if done carefully, can multiply the ROI manifold. It is the rental value of that commercial realty that determines its real worth.

Due Diligence
Last but not the least, due diligence should always be done, be it any kind of investment. Thankfully, with rules being relaxed by the government, it has now become easier for an NRI investor to do the due diligence. The overall procedure has been simplified. Still, there are few things that an NRI investor should look at like developers’ credentials, proposed infrastructural developments in and around the commercial property, transport facilities and the project management team.

The author is a real estate consultant. Views are personal.

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