Regarded as one of the most important avenues for capital appreciation, investment in real estate has emerged as a stable, smart, and profitable choice for many. Over the years, property investment has gained prominence while capturing the attention of new investors and seasoned professionals equally. This growth has been fueled primarily by investments in return-generating real estate assets such as pre leased properties. Investing in commercial pre leased properties comes with several benefits like higher capital appreciation, steady monthly income, inflation hedge and LRDs to name a few.
In India, investing in pre leased commercial properties has gained popularity in the past few years. In pre leased properties, the investor is assured of a consistent income from Day 1. In 2017, over 10 million sq. ft. of commercial property was sold in Gurugram, of which pre leased property contributed the most.
Given the nature of the real estate business, new investors often wonder if it is a safe investment choice. But pre leased properties are low-risk and one of the safest investment options available in the market, as the investor is the owner of the property and starts receiving a steady income from the very first day itself. Such properties being already rented out, come with a host of benefits such as higher capital appreciation, regular income, and higher liquidity.
Apart from the ones already mentioned, there are several other benefits of investing in pre leased commercial properties:
- In a pre leased property, there is zero waiting period for the ROI to start.
- Such types of investments are low-risk investments since the asset is already in your name, the principal amount is safe and the market is relatively non-volatile.
- It becomes an inflation hedge as the returns are generally higher as compared to Fixed Deposits/ Bonds/ Residential properties.
Assured Return Schemes v/s Pre-Leased Properties
Since they guarantee investors a high ROI, assured return investment options are becoming more and more popular today. Even though assured return investment sounds very attractive, there are a few points that the investors should keep in mind before investing in such ventures.
- It is true that developers are offering unrealistically high ROI in their assured return investment options, but the prices at which these properties are sold are equally high.
- There is a huge risk of stagnation or even depreciation in the property value upon getting possession, making pre leased property investments a better option than assured return investment options.
- As the property is received upon project completion, therefore the possession of property happens over the course of three to five years.
- In assured returns there is no guarantee of a tenant, whereas in the case of pre leased properties the tenant is already present as the property is already leased out.
Hence pre leased property is a safe, feasible and attractive option for investors. It is evident, seeing the market trends, that the demand for commercial space is going to increase at a rapid pace, giving stable steady returns and capital appreciation in the long run to the investors.