Let’s start with 10 simple rules to administer while considering investments in commercial real estate:
- Location of the Estate
Location is the prime point of determining whether an estate is capable of extended heightened potential or not. Further, the pricing also depends on the value that the location and its amenities extend. For example, commercial office spaces for sale in Hyderabad broaden the benefits of lowered pricing yet delivers IT enriched markets.
- The Integrity of the Quarters
Regardless of the location, digging into details like the quality of the structure, the amenities offered like lifts, parking lot, playground, and more. The higher the integrity, the more chances of attaining easy liquidity. Further, newer buildings hold more value compared to older models.
- Linking Demand & Supply
One of the most essential concepts that every investor should determine is the demand for the spaces and the efficient supply. A good demand-supply chain implies a higher value, chances of boosted prices, and rapid liquidity. For instance, commercial spaces Financial district, Hyderabad has an adequately high supply. Certainly, an exceptionally higher supply can favor older structures, while individuals with newer structures have ample choices.
- Comparing Market Rents with Rents of neighboring spaces
Market Rent is the current value paid by tenants, comparing it with the rates of neighboring spaces is extremely important. Unlike other concepts, it’s believed that the lower the rent, the more likely it is that the tenant will retain the space. However, the selling cost also needs to be lower in comparison to the neighbouring spaces.
- A Tenant Hunt
Gaining tenants promptly and the quality of tenants can improve your earnings with longer rents and increased flow of funds. Further, one can enjoy timely payments and expanded deposits made by quality tenants.
- Details on Interiors
Generally, in India commercial spaces come without any internal setting, like a bare space. While some tenants demand preset ceiling, wiring, and other interior settings, others enjoy designing their own space. It’s been said that tenants doing their interior are more likely to retain the space for a longer period.
- Comparing Basic Rents and Rents after interior setup
While developers try to make their space attractive by showing higher rents after getting the interiors done, the rents might not be so. Of course, the rents with interior settings are higher but only for a shorter span.
- Knowledge of Leasing
Leasing in commercial spaces is different from that of residential estates, they follow a 9 or 15 years period with revised periods every 3 or 5 years. While the tenants have the freedom to vacate at any given point after a fixed duration of 3 years, the owner can’t ask them to.
- Analyzing Security Deposits
Security deposits are offered by tenants for 10-12 months, it’s suggested to be cautious with startups and firms offering lesser duration of deposits as they might retain the space for a shorter duration due to inadequacy of funds.
Also read: Commercial Real Estate