Commercial properties, if intelligently bought, can be a regular source of income. Investors can buy pre-leased commercial space with assured cash flow that is well above bond returns. We also arrange to lease untenanted property to reputed tenants after a thorough check of credentials, if required. Apart from handsome rental income there is the prospect of capital gains as commercial space values rise over time. With urban Indian entering a boom phase, both retail and office space are witnessing steady escalation.

Choice Criteria

Choice of investment in commercial real estate based on:
• the quantum of investment
• investment horizon
• expected returns
• location preference
• industry preference

Lease terms

The following particulars are negotiated and finalised with the occupier of the property at the time of signing the lease:
Tenure:
Typically the tenure is 3+3+3 years; i.e. a total of 9 years with renewal every three years
Lock-in:
Usually the minimum lock in period for commercial property is three years. During this period the occupier cannot vacate the property, if he does, he has to pay the lease rental for the lock-in period
Security deposit:
Normally 6 to 12 months rental received upfront as security deposit. This has to be refunded to the occupier at the end of the lease.
Escalation:
Some percentage increase in rentals for every 3 years of the lease is usually permitted to keep pace with inflation

Benefits

• Regular monthly rentals @ 10% - 12.5% p.a.
• Potential of capital appreciation
• Effective portfolio diversification tool
• Repatriation of rentals and capital invested
  (subject to statutory regulations and tax deductions)