Benefits of Investing in Pre-Leased Commercial Properties

  • @kw
  • 05 Nov 2019

In 2017, NCR alone has experienced a sale of over 10 million sq.ft of commercial properties of which Pre-Leased properties got maximum benefits in locations like Gurugram, Noida and peripheral area of Delhi. Investment against pre-leased commercial properties became the most favorable option for serial property investors, entrepreneurs and corporate houses. The buyer of a pre-leased property is guaranteed of a settled return on Investment (ROI) from the start. The property investors earn a pre-settled rental income besides the Capital appreciation on the property that is purchased.

There are multiple benefits for purchasing a pre-leased property. As said the ‘zero’ waiting for the ROI to start, further the capital appreciation over a time period depends on the location of the project and development projects that take place in the surrounding area. There are presently a large number of pre-leased properties under offer in Raj Nagar Extension, Ghaziabad which can boast of large number of development projects undertaken by Ghaziabad Development Authority and the proximity of Domestic Airport, Metro Station and elevated express ways. In Raj Nagar Extension many Commercial Projects are coming up. KW Group is coming up with a Commercial construction of a Mall, KW Delhi 6. Investors look for pre-leased properties which has a great scope for capital appreciation. Since the project is in advance stage of construction the property price is low and once the project gets fully completed the prices are definitely going to escalate substantially. The project has large number of pre-leased properties which are Investors major target.

In terms of rental income pre-leased commercial real estate provides high ROI ranging from 9 -15% compared to 3-6% against residential properties. The other lucrative benefit of buying a Pre-leased Commercial property is that Bank loan up to 90 % of its value can be availed when needed this is often seen as a discount tool. Because of this, the HNIs (high net worth individuals) and UHNIs (ultra high net worth individuals) prefer investing in the pre-leased properties as there is a shorter processing period.

In India Investment against pre-leased commercial properties is gaining popularity in past few years. After demonetization, investors are finding decline in fixed income products like Term deposits, bonds etc. Today, both foreign and domestic investors, UHNIs and HNIs are actively investing in this asset type. At the time of the exit, the owner of the property would earn equity value along with capital appreciation earned on the escalated rent. Henceforth the investors can earn good returns; ranging something around 16-20% p.a. from pre-rented commercial properties.

The key variables make pre-rented properties a feasible and attractive option for Investors. It is evident, seeing the market trends that the demand for commercial space is going to develop further at a fast pace, giving stable standard returns and capital appreciation in the long run. 

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