Elevating Investments with Prime Commercial Spaces
Commercial Real Estate encompasses properties used for business purposes, including
office buildings, retail spaces, and multifunctional complexes. This asset class offers
investors the opportunity to tap into the economic pulse of cities and regions,
providing potential for both stable income and capital appreciation.
Commercial Real Estate includes a variety of property types designed for business activities,
such as offices, shopping centers, service establishments, and mixed-use buildings.
These properties are typically leased to businesses and offer a way to invest in the
commercial activity of a region.
Why Invest in Commercial Real Estate?
Influenced by economic growth, urban development, and consumer trends, the commercial real
estate market can offer insights into the business climate. Current trends include the rise
of remote work impacting office spaces, and the evolution of retail with the growth of
e-commerce.
Investment Considerations
Valuation Techniques: Valuations in commercial real estate consider factors such as
location, lease terms, tenant creditworthiness, and market conditions. Common valuation
methods include the income approach and comparable sales approach.
Ownership Structures: Investment in commercial real estate can be direct through property
acquisition or indirect through Real Estate Investment Trusts (REITs), funds, or
syndications.
In India, the continuous growth in income levels and enduring consumer confidence are
expected to boost domestic demand. This trend is supported by the manufacturing and services
PMI consistently remaining above the 50-mark in Q4 2022.
The Indian market witnessed a significant surge in Equity Investments in Commercial Real
Estate (CRE), reaching a peak of USD 6 billion in 2022, with indications of further increase
in deal flow throughout 2023.
Dominating the sector, office spaces and warehousing account for 69% of the total real
estate investments in India, highlighting their significant role in the market.
Global Outlook
The global commercial real estate market is anticipated to attain a
valuation of approximately $115 trillion in 2023.
Over the period from 2023 to 2028, the market is predicted to experience
a Compound Annual Growth Rate (CAGR) of about 3.03%, culminating in a projected market size
of around $133.5 trillion by 2028.
When comparing internationally, it is forecasted that the United States
will lead in real estate value creation, with an estimated market size of $24.67 trillion in
2023.
Source: Statista
Aspect
Residential Real Estate
Commercial Real Estate
Industrial Real Estate
Primary Use
Housing and living spaces (homes, apartments).
Business operations (offices, retail stores, hotels).
manufacturing, warehousing, and distribution centers.
Typical Tenants
Individuals or families.
Businesses, retailers, service providers.
Manufacturers, logistics companies.
Lease Terms
Shorter-term (usually 1 year).
Long-term(5-10 years or more).
Varies, often long-term.
Construction Timeline
Shorter timelines, smaller teams.
Longer timelines, larger budgets, larger teams.
Varies, often longer due to technical complexity.
Investment and Returns
Lower entry cost, steady rental income.
Higher investment, potential for higher returns.
Varies widely, often requires significant investment.
Maintenance and Management
Regular maintenance, direct tenant interaction.
Professional management, higher maintenance standards.
Specialized maintenance, less frequent tenant interaction.
Location Sensitivity
Highly sensitive to local amenities, schools, etc.
Dependent on business activity, customer access.
Access to transportation, less sensitivity to aesthetics.
Regulatory and Zoning
Subject to local residential zoning and regulations.
Commercial zoning, ADA compliance, more complex regulations.
Industrial zoning, environmental and safety regulations.
Regulations and Codes
Local building codes for safety and sustainability.
Stringent building codes, emphasis on safety and accessibility.
Most stringent standards for safety and technical requirements.
Project Examples
Single-family homes, condominiums, townhouses.
Office buildings, shopping malls, hotels.
Factories, power plants, warehouses.
Regular Income Streams: Potential for consistent rental income from
business tenants.
Capital Appreciation: Opportunity for property value growth in prime
locations.
Economic Resilience: Well-positioned commercial properties can remain in
demand even during economic shifts.
Portfolio Diversification: Adds a different dimension to investment
portfolios, distinct from stocks and bonds.
Market Fluctuations: Susceptible to economic cycles affecting business
growth and tenant stability.
Property Management Requirements: Active management needed to maintain
occupancy and property condition.
Lease Vacancy Risks: Potential income loss due to tenant turnover or market
downturns.
Regulatory Changes: Sensitivity to zoning laws, tax policies, and other
regulatory factors.
Primary Offerings
No investment opportunities available at the moment