5 Key Reasons to Invest in Commercial Real Estate for High ROI in India

Real estate investment in India has consistently stood out as one of the safest and most dependable options. The upward trajectory of property prices is a testament to its reliability. Commercial properties have recently gained significant popularity among investors in India. Let’s explore the top five factors that make commercial real estate a compelling investment choice.

1. Appreciation in Real Estate Value

From 2022 to 2027, India’s commercial real estate market is anticipated to grow at a CAGR of over 13%. International investors are projected to inject approximately 1 billion square feet of Grade-A office space as rental property investments into India by 2025. This points to a strong likelihood of real estate prices surging, especially in urban areas. This appreciation in property value can result in substantial returns and even generational wealth.

2. Inflow of Cash through Rental Income

Commercial properties have shown significant growth potential, with occupied office space in metro areas doubling from 5.43 million to 11.55 million square feet between January and March 2022. The commercial real estate sector encompasses office space, storage facilities, retail outlets, industrial sites, and institutional properties, all in high demand. Commercial properties are expected to deliver returns ranging from 8% to 10%, surpassing the estimated 3% to 4% returns from residential real estate.

3. Secure Investment Option

Commercial real estate is a secure investment choice for several reasons:

Low borrowing rates and rapid capital appreciation make it a viable long-term investment. Mixed-use developments, with multiple tenants, reduce the risk of income disruptions during vacancy periods. Longer lease durations in the commercial market add to the stability of income.

4. Tax Benefits of Commercial Real Estate

Standard Deduction: Commercial property owners can deduct 30% of annual maintenance, insurance, energy, and other expenses from rental income.

Section 24: Property owners who have taken loans to purchase, construct, repair, or reconstruct commercial properties are eligible for a tax deduction of up to Rs. 2 lakh.

5. Taking Advantage of Leverage

Leverage in commercial real estate involves using debt to enhance potential returns. Purchasing property with cash can be financially challenging, making loans a practical choice.

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