Leased commercial property provides regular rental income. Grade-A properties have lower vacancy risk and investor can add stable stream of cash yield to their portfolio.
Over medium to long term, commercial real estate provides protection against inflation, as asset values and rental rates increase during periods of inflation.
With investment in commercial real estate, investors achieve diversification benefits in their traditional investment portfolio.
Other than traditional investment asset class – such as Shares, Fixed Deposits and Gold – investors can invest in in real estate to reduce their portfolio volatility.
Real estate assets are proven to be less volatile than other traditional assets such as stocks. Real estate in your portfolio adds stability.
Alternative investments have been growing rapidly in India. This growth has largely occurred because of interest in these investments by institutions and high-net-worth individuals seeking diversification and return opportunities.
|Type of Ownership||Who Invests||Challenges|
|Exclusive Ownership||Mainly available to Ultra HNIs Family offices,Institutions||Competition with the developers for leasing, not available to smaller investors|
|Factional Ownership bought from builde||Bought by HNIs and Ultra HNIs, only UDS is registered, area bought remains unmarked||Property is managed by builders who generally charge high margin. Dependency on builder for tenant and property management. not available to non HNI investors|
|Group Buying||Group of known HNIs invest jointly in a property||Property and tenant management. Generally exit is a issue not available to smaller/average investors|
|Fractional Investment with Fractional Ownership||Small average investors, HNIs||Ownership is through SPV|
|Rental Income||Ranges 2%-4% p.a. of capital investment||Ranges 7%-11% p.a. of capital investment.|
|Capital Appreciation||Depends on comparable properties which is hard to ascertain and grows at a slower pace.||Depends on demand for office space which grows at a fast pace every year and can lead to higher appreciatio|
|Quality of Tenant||Individuals. Not easy to assess and ascertain thus exposed to default risk.||Corporate/ MNCs Assessable and hence one can reduce default risk.|
|Lease Term||Shorter; that ranges between 6 and 12 months||Longer well documented and negotiated lease terms that ranges between 5 and 10 years with lock-in period etc.|
Owning a commercial real estate requires thorough considerations in regards to taxes, property management, compliances, tenant management, diversification and financial obligations.
Investor buys property directly which requires more efforts and large amount of funds. Investor has to manage the property on its own or hire third party manager for property & tenant management.
Investor invests in a curated property with fractional ownership. Yield Asset manages all aspects of the property management and assists you through out your ownership journey.