Commercial Real Estate Segment Will Recover Fast

In the current scenario, commercial real estate segment will come out unscathed because of the increasing interest of investors including NRIs. 

A force majeur condition has overtaken the world, which is leading to the losses to the tune of crores. Real estate too is facing tough times but looking at the time of year it can be said that the impact will easily be absorbed. Commercial real estate will not get affected by it much and would be the faster to recover. At present, commercial segment is staring at the increased investment by the NRIs in present situation arising out of COVID 19.

The investment opportunities for the NRIs are now much more lucrative as rupee fell to an all time low of 75.41 against one USD. The possibilities for real estate have jumped up, especially after the near debacle of stock markets, as it is turning out to be a more secure investment. Another factor working in favor of real estate is that unlike equity and stock markets, this sector does not require the investor to have the domain knowledge.

The investors with real estate know-how diverted their attention towards commercial real estate. Commercial segment for them is the best tool as the yield and appreciation is better than the residential segment. In fact, commercial realty attracted the maximum private equity investments in the previous year, totaling nearly USD 3 billion in the first three quarters. Commercial realty attracted the maximum private equity investments in the previous year, totaling nearly USD 3 billion in the first three quarters.  This segment which includes industrial, retail and frontier segments such as co-living, will continue to do well because of the good returns in short and long-term. 

The sector with its bouquet of options is a winner for the NRI investor in the current scenario when oil and gold prices have plummeted. Realty sector has always targeted the NRI community which thinks of coming back to India or at least have a property in their home country. The measures taken by the government are working in favor of NRIs who are looking at return on their investment. In fact, the top property markets, including tier I and II cities, have recorded 3-5 per cent sequential growth in sales in the quarter that ended in December 2019. 

Traditionally, real estate market in India has acted as the favorite investment tool in troubled times when investors go for the security of speculative investment in mid to long-term. Investors look for quality development, especially the NRIs who are very particular about the ROI and security. At this time the commercial projects by reputed developers that are attractively-priced will get NRI attention as they will see good appreciation in mid-to-long-term.

--By Sanchit Bhutani, CFO, Bhutani Infra