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Commercial Real Estate Investing in Kolkata: Tips & Tricks

Posted by Manisha Dugar on July 19, 2022

Real estate has been an investment option since time immemorial. It may be a lucrative business opportunity, but it also carries significant risks. The changes in lifestyle demand a changed outlook on investment opportunities in real estate.

Of all the segments of real estate land, residential and commercial real estate are incredibly well-known. Commercial real estate, or CRE, is a broad class of real estate assets acquired to earn profits through rental income, price appreciation, or both. CRE is one asset class with a strong record of delivering respectable returns on investment. 

Reasons to choose to invest in commercial real estate:

Commercial real estate is a vivid example of why investing in real estate is a better and safer investment. Commercial real estate attracts investors with its high value of money over time and financial freedom. 

But why is commercial real estate such a lucrative form of investment? We are here to simplify it.

  • Cash Flow: If you are looking for a steady and strong income, a CRE investment is a great choice. Like investing in stock distribution, CRE also delivers regular income but is comparatively greater. With less volatility than in financial markets, you can enjoy a stress-free and long-lasting income from the real estate sector. Also, favorable tax benefits can be enjoyed alongside. 
  • A Diverse Portfolio: Portfolio diversification is a major target for any savvy investor. Traditional investments like stocks and bonds, EFTs, mutual funds, and others do not ensure stable returns in the downturns of the financial market. CRE acts as a cushion when one or other investments are underperforming. Moreover, the volatility of the stock market does not affect the investment in CRE. Hence, portfolio diversification is essential.
  • Tax Benefits: Investing in CRE is beneficial from a financial perspective. A portion of the property value can be deducted from your taxable income, which reduces your tax burden. Allowances like property capital allowance help in offsetting the taxes you need to pay on commercial property. You may also be able to avoid capital gains tax if you use the profit generated on another similar property within a specific time frame.
  • Substantial leverage: The concept of downpayment came into the market for a reason. Nobody buys a house outright, but rather with a downpayment or a mortgage. Being able to buy an asset without having to pay fully proves profitable to investors. Leverage your gain more than any other asset with a CRE investment.
  • Delivering excellent appreciation value: Proven historically, when compared to any other asset, commercial properties have always offered excellent appreciation over a period of time.

Commercial Real Estate Investment in Kolkata, What are the segments?

Commercial real estate is a growing sector with a decent track record in terms of return and risk. With that being said, take a look at the different types of real estate you can invest in:

  • Office: Office spaces are in high demand due to the scope of multi-tenant capacity. The property’s style and location give it a multi-tenant property. These spaces are designed to cater to the needs of businesses. Favorable lease terms and low tenant turnover benefit the landlords because of the difficulty of moving the business address. 
  • Industrial: Industrial real estate is one of the easiest ways to invest for investors due to its low entry cost and flexibility. It includes investment in warehouses, logistics facilities, and “flex spaces”. The predictable cash flow, lower operating cash flow, and favorable demand and supply facilities make industrial real estate a favorable investment opportunity.
  • Retail: Retail properties are designed for direct-to-consumer (D2C) businesses. High visibility due to the central location allows long-term leasing opportunities that benefit the investors in the retail segment. Retail real estate includes spaces in shopping malls, standalone bank branches, and others. 
  • Multifamily: A commercial multifamily property is a property with more than one residential unit and is converted to commercial earnings by renting out the units. It is the easiest way for an investor who is looking to enter commercial real estate investment. The relative stability in terms of economic outcome is what makes this form of investment worth choosing. 
  • Hospitality: Hospitality Real estate exists to serve people and help them unwind. Hotels, resorts, homestays, and entertainment parks fall under this category. This segment is one such sector that has come to terms with the most innovative changes in commercial real estate like budget hotels, extended-stay hotels, full-service hotels, limited-service hotels, short-term rentals, etc. 

If you are looking for a giving investment opportunity that can yield you manifold returns, then commercial real estate is an option that is considerable. With more and more businesses growing, the demand for commercial space will keep on increasing. With offices resuming their onsite work culture, office spaces are likely to be in growing demand.

Consider the preceding reasons, and you will realize that CRE is a sound investment opportunity, with a demand that will never dwindle as long as there is land and improvement potential.

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