The Pros and Cons of Investing in Commercial Spaces

October 22, 2024

Today, investing in real estate is an opportunity no one wants to miss. Given the sector’s growth rate, it is a proven means of increasing wealth. As the industry grows, there are many investing modes. The type of property can be divided mainly into residential and commercial properties. Residential properties mean homes and plots while commercial properties can include office spaces, retail and commercial properties, and industrial properties. Investing in office or retail spaces in Noida is a valuable proposition as Noida is an upcoming investment destination.

There are several pros and cons to consider before one decides to invest in office spaces in Noida which ae discussed below.

Pros

1. Rental income – The rental income from commercial properties is usually in the two-digit range (percentage of property value), while that from residential properties is in the single-digit range. This is one of the major reasons why investing in office buildings is highly lucrative.
2. Easy transactions – Another advantage of office spaces is that the tenants are corporations, banks, or large businesses that ensure the rent is paid on time. The owner does not have to run around to get the rent on time. Dealing with these entities is easier as professional organizations always follow rules.
3. Regular income – Commercial property in Noida is rented by businesses that ensure the rent is paid on time. Also, one can have long-term lease contracts with these clients reducing the cost of acquiring new clients.
4. Minimum furnishing cost – The owner does not have to invest in the furnishing of the property. The tenants always design the property interiors to suit their business and aesthetic requirements. This is a major advantage for investors investing in office spaces.

Cons

1. High investment – Investing in office buildings requires large capital making them accessible to high-net-worth individuals and those prepared to make such commitments. The investors will have to evaluate the investment carefully and take calculated risks.
2. Loans – The loans to finance commercial investment are costlier than those for residential properties. Interest rates depend on the type of property, investor profile, location, and repayment tenure. The loan sanction process is longer and more complicated.
3. Tax incentives – There is no tax rebate or tax benefit on the EMI for loan repayment used to buy commercial property in an office space. This increases the overall cost of acquiring a commercial property.

Noida is an upcoming destination for commercial property investments. Investors should consider the factors discussed above and make an informed decision to suit their investment plan while investing in office buildings in Noida.