How do you compare the average market price and circle rates in buying a commercial property?

In the housing sector of India, over the past five years, the latest data points towards a concentrated difference between the actual market prices of the commercial property and the circle rates in the major cities.

DELHI-NCR

In Gurugram, the market price at Expressway of Dwarka stood at about Rs 5,340 per sq ft while the circle rate of the commercial property in Gurgaon is about Rs 4,133 per sq ft. At the Sohna Road, the market rate is about Rs 6,710 per sq ft, up 35 per cent from the respective circle rate of Rs 4,969 per sq ft. Golf Course Road tips an average market price of the real estate of about Rs 13,150 per sq ft while the circle rate is about Rs 7,530 per sq ft.

In Noida, the market price on the respective Expressway is about Rs 5,075 per sq ft while the circle rate is about Rs 4,366 per sq ft. At central Noida, the market rate is basically Rs 4,920 per sq ft as against the respective circle rate of Rs 3,685 per sq ft.

Difference Between The Avg Market Prices And The Circle Rates

Anaraock said its data of research shows the difference between the average market prices of the real estate and circle rates, which was as elevated as 100% in assured localities of Pune, Mumbai, and Gurugram in the year 2015, currently stands at a mere 6 per cent difference.

NEW DELHI

The average market prices of the real estate quoted by the developers around various major Indian cities are about 6 per cent to 75 per cent higher as compared to the price of the government-prescribed circle rates, the particular value at which the stamp duties are paid and all the properties are properly registered, said the real estate consultant Anarock.

The final report comes in the background of heavy conjecture that all the developers might be forced to reduce their respective prices in view of high bank assessment and unsold inventory and also an economic slowdown because of the two-month nationwide lockdown.

A guidance value, circle rates, or ready reckoned (RR) rates are basically the value set up by the state government under which a commercial property cannot be actually registered. Each area inside a city has its own ready reckoner rate on which the particular stamp duty is collected.

In a major trend that is seen in the sector of Indian housing over the past five years, the new data points towards an abridged distinction between the ready reckoner (RR) rates and the real market prices in the principal (sale by the developer) segment in the top cities, said by Anarock in a statement.

MUMBAI

In Mumbai, the average market prices of the commercial property in the Lower Parel are about 6 per cent higher at Rs 34,660 per sq ft as compared with the RR(ready reckoner) rate of Rs 32,609 per sq. In Worli, the actual market value is Rs 38,560 per sq ft while the RR(ready reckoner) rate or circle rate is Rs 35,350 per sq ft.

BENGALURU

According to the latest data for Bengaluru, the market price of commercial property at Rajajinagar is about Rs 13,300 per sq ft as in opposition to the circle rate of Rs 9,012 per sq ft. At Indiranagar, the market rate is about Rs 11,500 per sq ft while the RR(ready reckoner) rate is Rs 10,312 per sq ft.

Not only this, but the average market prices of the real estate at Kharadi and Baner in Pune also higher by 7 per cent and 10 per cent correspondingly than the circle rates in these particular localities.

Source: https://www.spacecreattors.com/blog/circle-rate-of-commercial-property.php

How will the prices of real estate play out after this pandemic settles down

Like every other section of the economy, the real estate sector of India is rolling under the deadly impact of the coronavirus pandemic. But like it is with each and every crisis, this pandemic too may toss up opportunities for buyers as various cash-starved developers with unsold supply may be forced to sell at quite discounted prices.

While comfort housing may see a 20 per cent drop in the prices, developers would present freebies to buyers investing in the mid-segment. These possibly will range from delayed payment plans to even free insurance of Corona that may deal with their fears of a job loss. Commercial property may see a moderate price correction of about 5 per cent and also a downfall in the volume.

For illustration, a villa property in the Worli area of Mumbai is in the market for a small number of months now. The buyer had basically bought it for around Rs 40 crore a few years back and was willing to sell it for about a price of Rs 30 crore four months ago. Today, he is actually willing to sell it at a price of Rs 20 crore, and yet there is not a single taker. This is approximately at a price point of Rs 30,000 per sq ft, which is similar to a high-end commercial property located in the Golf Course Road of Gurgaon.

Chairman of HDFC Deepak Parekh recently said that he actually sees a 20 per cent drop in commercial property prices of unsold residential inventory, and advised all the developers to relieve of their stocks to improve the position of liquidity. He also cautioned the developers against more leveraging, which can actually affect their businesses in the long-run.

A report by HDFC Securities had noted that the large NBFCs expect more 20-25 per cent cuts in the prices of real estate and a 25-30 per cent dips in the volumes for the monetary year 2021 along with economic incentives such as stamp duty waivers. This shall aid the recovery of the demand. The market may merge in the hands of select large organized developers with a balance sheet that is quite strong and access to bank funding. JDA/JV model will carry on and land buying will take a backside seat. Launches will get deferred and the major focus will be on completing the existing unsold area.

A study by Liases Foras has also predicted that the prices of the commercial property in Gurgaon may come down by 10-20 per cent across geographies, at the same time as the land prices could see an even higher reduction of about 30 per cent.

Source: https://www.spacecreattors.com/blog/pandemic-impact-on-real-estate.php

Why choose a Commercial Property for rent in Gurgaon?

Since the last two decades, Gurgaon has changed from an economical wasteland to an IT hub. It is one of the fastest rising sectors in India in terms of Commercial Real Estate. Commercial property in Gurgaon and its real estate market is getting a hot property and is attracting the attention of investors as they are getting quite big returns on commercial property and high profits on investments.

Here are a few major reasons to get a commercial property for rent in Gurgaon:

1. Major IT Hub - Gurgaon comes under the major IT hubs of India; as a result, it’s quite popular among commercial property investors and real estate companies. Further, one can easily find skillful manpower, as this city is proximity to cities like Faridabad, Noida, Delhi, and Ghaziabad.
2. Excellent Infrastructure - Gurgaon has witnessed a remarkable upgrade of infrastructural in the past couple of years, which in turn has given a major urge to the growth in this particular region. Areas such as Sohna Road, Dwarka Expressway, and Golf Course Extension are some of the really good areas in Gurgaon where commercial property investors can benefit from a good return on investment (ROI). Owing to all these compensations, Gurgaon has seen investment rise in properties including educational institutions, hospitals, resorts, hotels, housing, and commercial premises.
3. Extensive Transport Network - Apart from the economic activity of Gurgaon, it has practical advantages from several other parts of the city. The biggest benefit of this city is its ability to link, via Rapid Metro System and Delhi Metro. In addition, it has the facility of standard private shuttles and bus routes which provide transport from to and from the airport of the city.
4. Many Multinational Companies - There are a plethora of multinational organizations showing their interest in real estate of commercial property in Gurgaon given the fact that it is a major IT hub of India. Further, businesses are also booming and many domestic industries have established their base in this city. Gurgaon’s popularity as a major investment destination for real estate can be clearly seen by the fact that all foremost real estate players such as Unitech, DLF, Godrej Properties, Indiabulls, and Tata Housing have a commercial project here.
5. High Return on Investment - Commercial property in Gurgaon produces higher returns against the investments.

Conclusion:

No doubt, Gurgaon has become a hot spot for both investors and real estate companies owing to its several benefits. Gurgaon is a perfect place for investment in commercial property because it not only offers you infrastructure, but also provides you potential customers and proper security. We at Space Creators are leading edge in providing all the solutions regarding real estate in Delhi NCR and Gurgaon.

Pre- Rented Property and it’s Benefits

The best Pre-Leased commercial property is the property which is accessible and on rent to an MNC, Bank, Branded Retail or Car Showrooms.

There are a plethora of benefits of investing in a pre-rented commercial property.

1. No risk involved like the pre-launch or under construction options, with executing registration and transfer of property.
2. Long term and immediate regular monthly returns.
3. High-quality tenants like Banks and Multi-National Corporations, Financial institutes, Branded Retails, etc.
4. Property appreciation with higher profitability.

While investing in a Pre- Rented Property, Investors must go through some guidelines or pointers which could help them grow their money faster and with higher returns.

1. Tenant: Tenant is the most important factor to determine the real rental income from a property. MNCs are the favourites amongst investors as Multinational Corporations not only pay rentals on time, but they also increase the capitalized value of the property.
2. Location of the Building: It is the deciding factor about the capital growth of the property as to how much it is going to get appreciated in the future. Good location produces a lower vacancy rate, higher capital appreciation, and long-term tenancies.
3. Exit Route: If an investor wants to sell the property in the future they must engage with a hassle-free process.
4. Lease Terms & Lock-in Period: Lease terms can be anything between 5-15 years. However, long-term leases are always a safer bet. The security deposit given to the landlord by the tenant exhibits the confidence and the steady cash flow of the tenant. Security deposit usually ranges from three to six months of rental value. Lock-in indicates the tenant’s strong business forecasts and commitment of a lease. The deal becomes more justified with a high lock-in period. A good deal is considered to be the one that has a long lease term with a minimum of 30 per cent –40 per cent time.

Frequently Asked Question?

What is Pre-Rented Property?

A property which is accessible and on rent to an MNC, Bank, Branded Retail or Car Showrooms is a Pre-Rented Property.

What are the advantages of investing in Pre- Rented Property?

No risk involved like the pre-launch or under construction options, Long term and immediate regular monthly returns, High-quality tenants like Banks and Multi-National Corporations, Financial institutes, Branded Retails, etc., Property appreciation with higher profitability.

What are the things to keep in mind while buying a Commercial Pre-Leased Property?

Tenant, Location of the Building, Exit Route (in terms to sell the property without any hassles) and Lease Terms & Lock-in Period

What is the Best Tenant for a Pre-Leased Property?

MNCs are the favourites amongst investors as Multinational Corporations not only pay rentals on time, but they also increase the capitalized value of the property.

Source: https://www.spacecreattors.com/blog/pre-rented-properties-and-its-benefits.html