Jagmohan Garg on Navigating India's Commercial Real Estate: Key Considerations for Investors

Jagmohan Garg, a prominent figure in the real estate industry and Director of Tirupati Infraprojects, discusses This upward trajectory and a burgeoning real estate ecosystem, contributing to a dynamic and promising landscape for commercial real estate ventures. Let's
take a look.

India's commercial real estate sector is experiencing a surge, mirroring the nation's robust economic growth and diversification, presenting lucrative opportunities for interested investors. Commercial properties, encompassing everything from bustling warehouses to luxurious hotels, vibrant shopping centers to modern office buildings, are being increasingly utilized for business operations, rental income generation, and long-term asset ownership. Fuelled by rapid urbanization and the expansion of diverse industries, the Indian commercial real estate market is projected to grow steadily.

The Indian commercial real estate market was valued at USD 74.80 billion in 2024, according to Market Research Future. Projections estimate the industry will expand from USD 90.96 billion in 2025 to USD 528.84 billion by 2034, demonstrating a compound annual growth rate (CAGR) of 21.6% during the forecast period of 2025-2034. With promising numbers commercial real estate has become the go-to investment for many.

Why Commercial Real Estate is a Good Investment

Commercial real estate presents a compelling investment opportunity for those seeking passive income due to its potential for substantial and consistent returns with minimal active
involvement. Unlike residential properties, commercial properties generally offer higher rental
yields, which translates to more income for the investor.

The structure of commercial leases, which are often long-term and may include built-in rent
escalations, provides a stable and predictable income stream. The average rental yield in India is around 7% on a good property (prices vary due to several factors).

"While managing commercial real estate requires expertise, investors can outsource these tasks to professional property management companies, allowing them to enjoy the benefits of
ownership without the day-to-day hassles of property management. The potential for value
appreciation, driven by market conditions, capital improvements, and savvy management, further enhances the investment's appeal." Says Jagmohan Garg.

He adds "The tangible nature of real estate provides a sense of security, as the investment is tied to a physical asset with intrinsic value."

However, there are a few things that one should keep in mind while investing in commercial real estate.

Things to Consider Before Investing in Real Estate

Buying real estate in India is a significant decision that requires careful planning and consideration. The process involves navigating various factors, from budgeting and location
selection to legal due diligence and financial planning. Before embarking on this journey, it's
crucial to assess your financial situation and determine a realistic budget, accounting for not only the purchase price but also potential renovation, decoration, and maintenance costs.

Utilizing tools like EMI calculators can help ascertain monthly outgoing amounts and ensure the loan amount remains within comfortable limits. A substantial down payment is typically
required, often around 20% of the property value, along with additional funds for registration
fees, loan application fees, and interior design expenses.

Jagmohan Garg says "Location is another critical aspect to consider, as it impacts the property's future scope, development, and resale value. Opting for a location with good amenities,infrastructure, and easy access to essential services such as schools, hospitals, and transportation hubs can significantly enhance the property's long-term value and likability. A good location increases footfall and is an easy opportunity to lease to brands for generating rental income"

Legal due diligence is paramount to ensure a smooth and secure transaction. This involves
verifying the seller's title to the property, checking for any existing disputes, and obtaining an
encumbrance certificate from the sub-registrar's office to identify if any legal dues are pending.

It's also essential to ensure the property has all necessary approvals from local authorities,
including building plan approval, environmental clearance, and occupancy certificates. Engaging a property lawyer for due diligence and documentation is highly recommended to avoid potential legal issues in the future.

"While property inspections are not yet widely adopted in India, they can provide valuable
insights into the property's structural integrity and potential problems, helping buyers make
informed decisions and avoid costly repairs." Opines Jagmohan Garg.

Ultimately, successfully navigating the Indian real estate market requires meticulous preparation, thorough investigation, and well-informed choices. Securing appropriate financing, selecting an optimal location, performing exhaustive legal due diligence, and seeking expert advice are all vital components of a prosperous real estate venture.

By thoughtfully addressing these elements, prospective buyers can confidently maneuver the
intricacies of the Indian real estate environment and achieve their goal of property ownership in this thriving country.