Buy Commercial Properties in Ahmedabad - How Profitable is Investing in Commercial Real Estate?

How Profitable is Investing in Commercial Real Estate?

Real estate investments are often considered the most profitable. With big corporations like McDonald's running their entire business based on real estate, the options for investment here seem even more lucrative. However, a significant difference between real estate and most other investment modes is the amount of capital that goes into the actual investment. While you can buy stocks or even angel invest in a company with an amount in 5 digits, real estate investment starts in 6-7 digits. While this offers a significantly larger margin for profits, it also boosts the risks. If you're looking to invest in an excellent Commercial Property in Ahmedabad, here are a few rules you should follow to ensure it will be successful:

Location Matters

The location of your piece of real estate is crucial when trying to calculate your potential for profits. You will be able to get returns on your investment via two mediums – rent and appreciation. Both of these depend on the location of your property. It would be best if you ideally looked for areas with a vacancy rate lower than 5%. An excellent place to start would be to check out the commercial properties by Iconic Shyamal.

Building Quality

Your building's quality is another essential factor that will significantly affect the amount you can earn from it. Whether Class A, B+, or B, the building's quality will be something tenants look into before agreeing to rent your property. Moreover, multinational corporations can always pay a premium for higher quality in the property they rent out. Therefore, it's always a good idea to get the building thoroughly examined by an expert before investing in it. You can also rely on a trusted developer to provide you with high-grade buildings. Iconic Shyamal’s range of Class A commercial property in Ahmedabad is bound to impress you.

Understand Demand Vs. Supply

The concept of Supply and Demand dominates the free market worldwide. Being an investor requires you to understand this concept well enough. You can take a look at the micro-markets where brokers like Knight Frank publish annual demand reports for commercial properties in Ahmedabad. If the demand in the micro-markets of Ahmedabad falls short of the supply, you can expect the prices to drop soon and wait before investing. If the opposite is true, then you should invest as quickly as possible to get the best price possible on real estate.

Analyze the Interiors

In most cases of commercial property leasing, the role of handling the interior fittings and facilities falls on the tenant. You should avoid spending too much on the interiors, and instead deliver the office as bare as possible. This is especially true for a NNN lease. Doing so will increase your returns as a tenant who furnishes the office on their own will be more likely to stay for a longer time to recover the costs.

The Security Deposit is a Test

The security deposit that the tenant chooses to offer you will let you know if they are the right choice for you or not. Typically, the security deposit for commercial properties varies between 8- and 12-months rent. However, if a tenant offers you six months' worth of rent or less in the deposit, it can be a red flag. This can either indicate that they are looking for a relatively short-term contract or financial issues. However, this isn't always the case as startups often look for buildings with a low-security deposit, and many of them turn into long-term tenants.

The next time you look at the commercial properties in Ahmedabad, for your next investment mode, consider the above rules, and you will surely make the right decision.