Benefits Of Commercial Investment In Chennai- Everything You Must Know

Investing in real estate properties is one of the best ideas to get a considerable return. India is experiencing endless possibilities and growth in real estate properties. Undoubtedly, this will make all metro cities face the best future in commercial real estate properties packed with infinite investment opportunities. No need to say more that real estate is the most solid and robust market one should invest in. It may not be a daily price-based market, but the real estate market, especially the commercial real estate market, is a very trustworthy source of investment. 

But those who are pretty new in this investment planning somehow get confused between investment in residential properties and commercial properties because there is no proper guidance and discussion of the advantages and disadvantages of these two properties. Some new investors may think that residential properties are for small-scale investors, whereas commercial projects are for large-scale investors. Well, it is proper to have a few instincts but not always. Right now, commercial real estate properties have a significant share. Large-scale investors are showing more interest in it because, as per research, commercial real estate properties will contribute nearly 13 percent to the country’s GDP by 2025. Retail shops can also be a tea for average salaried employees who want to enter the investment world. 

As we said earlier, all cities are experiencing rapid real estate property investment growth, and Chennai is no exception. High-end investors are showing their interest in picking up Chennai. Especially commercial real estate properties are getting more attention from everyone. Chennai is now a hot place for small start-ups, e-commerce, consulting businesses, and prominent IT companies because the city offers better and easier access to different parts of cities, states, and countries. It is recorded that the development of commercial real estate projects has increased by 10 percent to 11 percent in Chennai. 

Commercial real estate investment is supposed to be increased by large-scale investment, which institutional investors support. Also, the whole investment structure is improved further by raising the Real Estate Regulatory Authority(also known as RERA). The Indian government is also grabbing the initiative to ensure the retail real estate market in various metro cities by introducing many schemes and programs. 

To know details about the benefits of investing in commercial real estate properties, you should check this piece of the article now.

Let’s get started!

Introduction to commercial real estate – what is commercial real estate property?

Commercial Real Estate is a quick and continuously evolving market. It is a type of real estate comprising businesses, retail, and office spaces. Anything that is not used for residential purposes and used for carrying out business operations is considered commercial real estate. You can say that commercial real estate is any property owned to produce income. These real estate properties are used only for profit generation. Every aspect, such as tax, laws, and regulations, is different for commercial real estate properties. 

These real estate properties depend on factors like sales prices, building, and occupancy rates. There are six specific types of commercial real estate properties. We will discuss that at your convenience.

Types of commercial real estate properties in Chennai

Commercial real estate properties can be categorized further into five major types. 

• Multifamily real estate property
• Office Spaces real estate property
• Industrial real estate property
• Retail real estate property
• Hospitality real estate property

Here are the details of these five types of commercial real estate properties.

• Multifamily real estate property 

Multifamily real estate is a residential property, but there will be more than one unit. This is the easiest way to convert your residential property to a commercial one by renting out the units. It is also a straightforward way for any investor who is looking for commercial real estate property for investment. One of the most significant advantages of owning and renting out multifamily real estate is the multiple income streams from the numerous families that would occupy the residential units in the property. Now, multifamily real estate property can be divided into a few different types. These are duplex, triplex, quadplex, mid-rise and high-rise apartments, student housing, and senior and assisted living.

• Office Spaces real estate property

Office space as a commercial real estate property is the most demanding one which is always on the top of the demand list of any investor. However, there is a valid reason. The multi-tenant capacity makes the office space the most demanding one. Based on a real estate property’s features, location, and structure, the property can be converted into a challenging office space or, be very specific, a multi-tenant capacity space. There will be no less of clients for these kinds of properties. Clients find their way to reach properties like this. Office spaces can also be divided into a few types like Central Business District, Commercially Zoned Homes, Medical Office, Suburban Office Buildings, etc. One can distinguish these types per the property’s features and specifications. 

• Industrial real estate property

Industrial and commercial places are pricey and have been taking off well since the starting point. Industrial spaces include many industrial works like production, manufacturing, supplying, etc. Whatever business tasks are there, all will need an industrial area to initiate the business. Industrial and commercial real estate properties can be divided into the bulk warehouse, flex warehouse, heavy manufacturing, light assembly, cold storage, showroom, etc. A significant group of investors likes to enter these industrial real estate properties because they are easy to join with their low entry cost and flexibility.

• Retail real estate property

Retail or B2C business needs retail real estate properties. The retail business indicates selling all kinds of products and services directly to all customers, also known as the B2C business model. Usually, properties in an easily accessible place can work well as retail real estate properties. Real estate properties are further divided into community retail centers, power centers, regional malls, neighborhood shopping centers, and others.

• Hospitality real estate property

Hospitality real estate is usually used for travelers and people who want to change their stay a few times. The basic hospitality real estate properties are hotels, resorts, entertainment parks, homestays, holiday homes, hostels, etc. This commercial real estate property can be further divided into budget hotels, extended-stay hotels, full-service hotels, limited-service hotels, short-term rentals, etc. 

The Latest Scope of Commercial Real Estate in Chennai

Chennai became the hot place for all start-ups, e-commerce businesses, IT companies, and other industries, which triggered the city to flourish in commercial real estate property investment. There have been lots of developments across the city, and no need to say more, these real estate developments are providing the best opportunity to business owners and investors for investment and new business ideas.

Here we mention a few places where real estate developments are increasing immensely.

• Development at Perambur

Located 3kms from Sow carpet, an ongoing project at SPR city holds a promising future in the Perambur region of Chennai. This project will give business owners a more accessible and efficient way to carry forward trading activities without issues. This is the most significant opportunity for those looking to invest in new shops for their business.

• North Chennai development

There is a substantial enlargement in commercial real estate in the North Chennai region. Places like Ennore, Red Hills, Royapuram, Tondiarpet, and nearby locations fall in North Chennai. The development of the commercial real estate market in Chennai is an outcome of the expeditious and user-driven nature of the market. Since the north of Chennai is becoming the synonym of industrialization, the requirement for connectivity to other locations will influence the real estate market.

• South Chennai development

Areas surrounding Adyar, Velachery, Thoraipakkam, and Injambakkam are constantly becoming residential. Therefore, there has been an expansion in shops, hotels, schools, colleges, malls, hospitals, etc., to meet the daily needs of residents of the area. This opens a new entrance for commercial real estate investment.

Why Should You Invest In Commercial Properties In Chennai?

It is an obvious and adequately known fact that investing in commercial properties yields higher returns than any residential property. Also, this market increases at twice the rate per year. Many new commercial places are being developed due to high demand in Chennai. There is a diverse economy when it comes to investment in commercial projects. 

Suppose we concentrate on the Chennai-based commercial real estate property market statistics. In that case, we should see that the commercial property in Chennai has recorded gross absorption of 4 million square feet of office space annually. On the other hand, warehouse renting activities have faced a considerable growth of 3.4 million square feet due to the massive demand for manufacturing and delivery services. Another huge commercial place-based market is the data center which has also been recorded as one of the highest occupiers of Chennai’s commercial real estate properties. 

These statistics are more than enough to make you understand that Chennai is experiencing a huge market and demand for commercial places, triggering investors to invest in commercial areas to get a healthy return.

What Are The Benefits Of Commercial Investment In Chennai?

As we are saying that the demand for commercial markets is continuously growing, and investors are looking forward to investing more in these commercial sites. Here is the list of advantages or benefits that can be obtained from commercial investment in Chennai.

• Higher rental income

Higher rental revenue comes first when you want to know the very first benefit of investing in commercial real estate properties. The rental earnings in commercial property are more elevated than in residential property, making it the most demanding investment factor. The rental returns from a commercial property hit residential property arrows down. This is the single most significant advantage of investing in commercial realty estate. Sometimes, the rental charge can be higher because of the commercial property’s location, and it may be 12-15% higher if the site is a prime one and easily accessible from different cities, states, and international borders. If you want to consider this as the only factor, no doubt, commercial investment is way better than residential investment.

• Ease in dealing with tenants

In the case of commercial properties, usually, tenants are corporate sectors, banks, or retail chains. It is easier to deal with such entities. Also, there will be no running around to get the rent. Also, if you have a renowned bank or an IT firm on one floor, your property already gets a big focus from other corporate sectors. 

• Regular Inflow of Income

Investing in commercial real estate properties is also one of the most significant advantages. The revenue from commercial property is usually maintained per the financial routine of the corporate sector or whoever the tenant is and is more uniform than residential property. Also, the commercial rental is confirmed and secured due to a longer lease span.

• Zero furnishing cost

Furnishing cost is zero in the case of commercial real estate investment. This is because once you rent it to a tenant, the furnishing costs are done by them. So, as an investor, you can give your lessee raw property. The tenant will decorate and design the commercial place as per their guidelines and rules of functioning and management. For example, a bank will have a different furniture layout, whereas an e-commerce store or an IT company will have a completely different design. So you do not need to think about the furnishing cost at all.

• Depreciation advantages

Investing in and grasping commercial real estate provides you with many tax shelters through the devaluation of the building and progress in trusting the investment’s holding system. 

Bottom Line

So, this is about the benefits of commercial investment in Chennai. The retail investment trend is increasing daily and varies from market to market. After the hectic situation of Covid 19, the pandemic, and work from a home model, commercial real estate properties are coming again into demand. This factor boosts the demand for commercial properties across Chennai and pan India. So, commercial investment in Chennai is definitely rewarding in terms of earning and other aspects. You can also nail your commercial investment by doing all kinds of research work and planning about goals soon—all the best for your investment in commercial properties in Chennai.