By Soniya Gaonkar on Sep 9, 2022 11:00:00 AM
In Pune, commercial real estate is on a continual rise. Of course, it witnessed a brief downfall during the pandemic. But as against the opinions and projections of many, Pune’s commercial real estate bounced back strongly after the pandemic!
Per reports, Pune has witnessed a surge in the leasing activity in the second quarter of 2022, with nearly three million square feet (almost three times more than the first). New leases constitute to around 54-56 percent of the leasing activity, followed by pre-commitments to about 23-25 percent and term renewals at nearly 20-22 percent. Pune’s net absorption rate climbed to over 300 percent YoY!
While all that showcases a healthy picture overall, as an individual investor, you’d be more concerned with your investment and its returns. Accordingly, you need to know what kind of property would help you multiply returns and wealth in the long run. So, let’s see what kind of commercial property could be profitable.
Showroom/ retail spaces are mainly leased out, as business owners prefer leasing over renting to stay secure from the yearly rent hikes. The lease increment depends on the space’s location, business potential, prominence, and the lease agreement. However, on average, as an investor, you may fetch a growth of around 13-15 percent during every lease agreement renewal.
Investing in prime locations undoubtedly calls for a significant investment. But considering the kind of space these business owners need, it is worth it. Besides, leasing out the property assures you of steady returns on your investment.
So, if you are looking for long-term returns, leasing showrooms, and retail spaces may make more sense.
Small to Mid-Sized Offices
Small to mid-sized offices do not share a different story either. On average, this segment of Pune’s commercial real estate offers an increment of 12-15 percent at every lease agreement renewal. But again, the increment depends on the contract terms, the office location, etc. For example, the lease returns in PCMC, Wakad, Rahatani, Baner, etc., would be more than those in purely residential vicinities.
Nevertheless, the need for small to mid-sized offices is substantial, considering the inception and emergence of various startups and SME businesses in the city. Thus, investing in small to mid-sized offices could be a prudent idea, considering the long-term prospects, and renting or leasing such offices is commercially more viable for the many startups, SMEs, and consulting businesses out there.
Small to Mid-Sized Shops
Small to mid-sized shops are usually rented instead of leased. The business owners might not necessarily come with a long-term perspective in mind. Hence, they prefer renting the space for a short duration. But that is an opportunity for investors to leverage the quick yearly incremental returns of these spaces.
For instance, in Pune, the average rental hike for a small to mid-sized shop ranges between ten and 12 percent. Although again, it should be noted it is an intermediate range. In some locations like Deccan, Pimpri, Chinchwad, Wakad, Hinjewadi, etc., the rental hikes are more significant and promising than in many other suburban locations, where the increments don’t go beyond average.
Claiming a particular property type to be the most profitable is pretty subjective. It depends on your investment objectives, the returns you expect, commercial viability, and also the kind of prospects you’d get after investing in the property.
For instance, if you have the financial muscle to invest in a prominent location and in a space suitable for a business expected to thrive at that location, you can expect better returns on your investment. So, the investment’s profitability depends on various decisive factors, which you must think about as an investor.
Kohinoor World Towers (KWT) – The Emerging Commercial Investment Destination in Pune
KWT is a massive commercial center featuring various small, mid-and big-sized business offices, restaurant spaces, showrooms, retail shops, etc. KWT is strategically located between Pimpri and Chinchwad on the Old Mumbai Pune Highway. The project offers excellent connectivity and many ultra-modern amenities to resonate with the modern businessperson and real estate investor. Call +91 20 6764 1818 to know more about KWT.