Real estate investment has been a part of Indian families’ portfolio even before the term gained popularity in the annals of the investment market. The difference, however, lies in the kind of real estate available for retail investors then, and now. Thanks to options like fractional ownership and REITs, it has become easier for a retail investor to get into commercial real estate investment. As opposed to earlier, when buying a plot of land or a residential house/building was the preferred option for individual investors. In commercial real estate, while there are many different types of properties, each with their own set of benefits, let us take a closer look at commercial office space. The pandemic situation that started in 2020 forced everyone to adopt a way of life that challenged the norm. Now that things are slowly inching back towards the old normal, the question remains, will offices still be in vogue? The short answer, yes. Read on to see why we think so.
From the perspective of being a stable investment option, commercial real estate has always stood its ground. Even in the face of the pandemic, it has shown remarkable resilience. However, some sectors among the same did take a bit of a hit, especially the ones related to retail, hospitality, and office. However, the office market has been quick to recover in this regard and the Indian office market has been seeing heftier transactions and new leases as the year advances through its days. With NCR, Mumbai, and Bengaluru having some of the lowest average rents in the APAC office market space, they make for lucrative choices for businesses to set up shop. As for how the overall APAC market has been performing, the following chart from Knight Frank speaks volumes.
But the graph means nothing if people aren’t willing to return to work eventually at the office. Research again shows, that even though it is gradual, people are slowly returning to work in the major office markets and in India, as of April 2022, vacancy rates have dropped to 20% or less in NCR, Bengaluru, and Mumbai. The trend can even been seen across the APAC market.
In India, rental rates have mostly normalized or are showing a growth over the quarters, with Bengaluru leading the list at 6% growth in prime rental rates quarter on quarter.
If looking at a stable investment option that provides good returns, undoubtedly, the commercial office space segment should be on your watch list. With rents slowly going back up and new supply of space already on the way, now is as good a time as any to consider investing in commercial office space. What’s better, through fractional ownership, you can even lessen the burden of the entry ticket into this wonderful investment option. To know more about how Strata can help in this, please visit www.strataprop.com.