Why it is a good time to invest in office spaces? Experts explain
PremiumAccording to experts commercial real estate is preferred over the residential market
Investors are once again drawn to the real estate sector in India. Industry experts believe that an attractive appreciation potential, recurrent rental income, and the tangible nature of real estate industry have resulted in renewed investor interest. They believe that commercial real estate is preferred over the residential market, as the former is a better option to earn rental yields. Within the commercial segment, offices are once again becoming the favourite.
So what makes offices one of the safest and most suitable assets to bet on for. Experts decode
Anurag Goel, Director, Goel Ganga Developments
The office is also a great asset for diversifying and spreading portfolio risk. While financial instruments are erratic, real estate assets such as the residential market give suboptimal returns. In contrast, investing in the office market is not only safe but can also give concurrent rental income. Meanwhile, offices can also give a decent capital return, provided they are held for mid to long term. (On average before investing in an office asset, one should have a holding period of around 5 years.)
Nakul Mathur, MD, Avanta India
When it comes to real estate investing, as a thumb rule, commercial real estate is preferred over the residential market, as the former is a better option to earn rental yields. Within the commercial segment, offices are once again becoming the favourite. As the crisis has de-escalated and a more enabling growth environment has taken over, office demand is picking up fast in most of the major cities. Most organizations are aggressively implementing back-to-office programs, resulting in a significant increase in office absorption. This is also resulting in investors gaining confidence in the asset class.
Suren Goyal, Partner, RPS Group
Another advantage for investors is the subdued prices of office stocks. In 2021, as per the CBRE South Asia report, the total leasing activities in India amounted to 41 million Sq. Ft, growing by 16%. However, the very same year, a total of ~ 50 million Sq Ft of new office supply entered the market, which has taken the total cumulative supply to 773 million Sq Ft. An oversupply in the market would be a blessing in disguise for discerning investors as they can acquire the asset for affordable prices.