The investments in Commercial Pre-leased Property has caught the imagination of HNIs, Ultra –HNIs and Corporate. This has recently become one of the attractive investment option in metropolitan areas like Mumbai, Bangalore, Delhi, Chennai and other cities in India. Pre-leased property are the premises which are already leased out to companies, individuals for longer term (leasing) and investor investing in these premises can earn rental yield by renting this leased-property. This pre-leasing trend is catching up in India. In fact after Mexico, it’s the India where the rental yield is the highest as on 2010-11 followed by Brazil and then Australia and USA.
The rental income in prime metro area ranges between 8%- 12%. This rental increment increases with an agreed incremental rate. This increases overall all return for the leased period. Moreover, the corporate also gets income from security amount deposited. The rental income is a recurring income which comes to the investor and has a long time horizon.
The investment in preleased property has also seen development due to factors which is solely market originated and fundamentally supports its growth trend. The global recession had been an important factor for stabilizing the prices of the property. This created an opportunity for investors. This opportunity gained momentum with choppy markets and breathtaking inflation. It resulted into a undervalued investment option. This opportunity escalated when IT companies reinstated itself. This resulted in more demand for spaces and the real estate was seen to grow at around 30-40% growth in demand. So now it has become one of the hot investment ‘product’ in metros.
This is a guest post by Mr. Mitesh Agarwal, BBA & MBA (Finance). Currently working as Financial Analyst with a leading firm in Mumbai.
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