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Thu 23 Jan 2020 02:39 PM

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Indian developers target wealthy NRIs with lucrative commercial asset offers

The average ticket size of commercial properties in tier 1 cities will be about $1.4 million, while that in tier 2 cities will be about $14,000

Indian developers target wealthy NRIs with lucrative commercial asset offers

Indian real estate developers are increasingly resorting to strata sale – sale to retail or individual investors - for commercial properties such as office and retail spaces, a move which is widely seen targeted at NRIs (non-resident Indians) and high net-worth individuals to the commercial realty segment in the country.

Commercial property developers in India have traditionally been focusing on companies and large retail chains for selling space in their projects.

Industry analysts said with rental yield for commercial assets estimated at 6 -10 percent depending on the city and location of the property, investments in this segment could be a lucrative option for NRIs for earning handsome returns for their surplus funds.

Rental yield for housing projects in India is estimated to be lower, at around 3 percent.

“It will be a rare win-win situation for real estate investors and developers,” Anuj Puri, Chairman, Anarock Property Consultants, said.

“This will offer investors, including NRI investors, an opportunity to earn higher returns, while the project developers will stand to benefit by being able to generate liquidity for business expansion," Puri added.

Sources in real estate industry said the average ticket size of commercial properties in tier 1 cities will be about $1.4 million, while in tier 2 cities, like Allahabad or Calitcut, it will be about $14,000.

Industry sources said the trend on strata sale of commercial assets are expected to gain more traction in the coming months, with several large commercial property projects are currently under various stages of implementation in metros and tier 2 cities across India.

According the latest report by Anarock, as many as 100 new malls spanning over 49 million sq ft are scheduled to come up across India by 2022-end.

Executives with leading realty companies said many developers are now listing anywhere between 25-40 percent of their office supply for strata sale.

Prestige Estates, the Bengaluru-based leading developer, last year had announced its plan to strata sell 25 percent of its office assets to individual investors.

“We have been seeing increased enquiries from HNIs, especially NRIs, for some of our commercial projects in Delhi-NCR (national capital region) of late,” a senior executive with DLF has said.

“Sliding return on investments in residential property assets seem to be the reason for NRIs to look at alternate high yielding investments in commercial segment,” he added.

Industry circles said cities like Bengaluru and Mumbai are listed as the most lucrative for commercial asset investments, while cities such as Hyderabad and Pune are also emerging as high potential areas because of their relatively lower capital values and high demand.

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