According to the experts, the commercial real estate sector is on a boom. In 2017, NCR alone has seen the sale of more than 10 million sq. ft. of the commercial real estate; in which pre-leased property for sale in Gurgaon has grabbed the most benefits. This trend clearly shows how in-demand is the pre-rented property market. And not just that, it has also become a favourable investment option for serial property investors and enterprises looking to buy commercial office space in Gurgaon.
Before we dig in further about its rise as a compelling investment option, let’s understand the concept behind pre-rented properties. A pre-leased property denotes to the one that is sanctioned to an organization and afterwards sold to a customer including that lease. The buyer of a pre-rented property is guaranteed of a settled ROI (Returns on Investments) from the first day, which is been composed as a rental income as the rent deed is transmitted to their name.
Take a look at why pre-leased properties have become a compelling investment option:
A pre-leased resource induces the customer of a “zero” waiting period for the ROI to start. Preleased investments offer capital appreciation little over a time. It likewise furnishes the customers with an unmovable rental income and great returns. Because of these focal points, business owners and corporate investors want to buy pre-rented property over unleased resources.
In terms of rental output, the pre-leased commercial real estate provides high results in the range of 9-15%. While the residential estate provides about 3-6% as rental revenue. There are other benefits in getting pr- leased commercial property for sale. Like, if an enterprise is looking for a property in the market, the interested party can also avail loan, as much as 90% of the entire price. This is often seen as a discount tool, which helps buyers in the buying process. Because of this, the HNIs (high net worth individuals) and UHNIs (ultra high net worth individuals) prefer investing in the pre-leased properties as there is a shorter processing period. Today, there are hundreds of assured return projects in Gurgaon that commercial property investors can utilize their benefits.
Pre-leased Commercial Real Estate (CRE) has been increasingly becoming one of the attractive investment opportunities in India over the past few years. Post the demonetization, investors found that the returns on the fixed income products like the bonds, fixed deposits, etc. have seen a rapid decline in investment interest. Thus, leaving pre-leased CRE has a lucrative investment opportunity for getting stabilized returns with appreciation on exit. Today, both foreign and domestic investors, UHNIs and HNIs are actively investing in this asset type.
When venturing into a pre-leased CRE the risks involved are low to medium. As the investments start creating returns from the very beginning, the business owners enjoy a stable debt-like return period during the entire holding period. These profits can go from 8.5%-9.5% p.a. in the first place and steadily enhance due to the lease accelerations, which is ordinarily 5% on a year or 15% in the following 3 years. These are balanced out returns because of rent period is ordinarily around 3-15 years
At the time of the exit, the owner of the property would earn equity value along with capital appreciation earned on the escalated rent. Henceforth the investors can earn good returns; ranging something around 16-20% p.a. from pre-rented commercial properties. These can be improved further in case a portion of the asset acquisitions can be organized through a combination of leverage through lease rental discounting available from banks and financial institutions and equity investment by the asset owner.
In bigger cities like Gurgaon where the capital value is higher as compared to other micro markets, opportunities of buying a rented office space give a great scope for investments for creating a nifty business portfolio. In terms of tenant profile, Gurgaon sees a diversified tenant mix from sectors IT/ITES, BFSI, Pharma, Manufacturing, e-Commerce etc. which provide the owner portfolio balance and diversity. Also with positive macroeconomic factors along with positive regulatory initiatives, the demand from various sectors for additional pre-rented property in Gurgaon is bound to increase thereby having a positive impact in pre-leased CRE valuations.
The key variables make pre-rented properties a compelling investment option. It is evident, seeing the market trends that the demand for office space is going to develop further at a hearty pace, giving stable standard returns and capital appreciation in the long run. Higher transparency would further boost the commercial space demand and therefore be making pre-leases a compelling investment choice.