Commercial infrastructure has been an important part of economic development and will remain so in the future too. It is not possible to ignore the role of commercial infrastructure in economic growth. The sale of commercial properties during the lockdown was an indication that investors and buyers realise the role this sector plays in the well-being of the economy and the country.
During the Coronavirus induced lockdown, this sector got hit badly as no commercial activity was taking place. However, this sector, including retail, is recovering faster as people get back to work to keep the wheel of fortune rolling.
At present, the commercial real estate segment is staring at an increased investment by the Non-Resident Indians (NRIs). After the situation arising out of Covid-19, the investment opportunities for the NRIs are now much more lucrative because of the depreciation of the rupee.
The investors with real estate know-how diverted their attention towards commercial real estate because it gives them better yield and appreciation. This is why commercial real estate attracted the maximum private equity investments in the previous year, totalling nearly USD 3 bn 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 as well as long-term.
Emergence of High Street concept
An emerging concept in the commercial segment, which has a bright future, is High Street. When everyone moves towards the mall concept, the high street brings the old-world charm wrapped in innovations for people’s convenience. The intention is to get the concept that the people already know and grew up seeing, and the concept has the maximum chances of acceptance than foreign concepts.
Both high street retail and shopping malls have their utilities and set of dedicated visitors. Changing lifestyle and rising urbanisation has led to the growth of high street retail avenues. With diminishing spaces, high streets are coming out as the places where people meet, greet, and have fun. Looking at the acceptability of the concept, investors too are showing an inclination towards it, resulting from foreign brands’ increasing interest in this concept.
High streets are considered better than malls as they yield a better rental return. Customers prefer the high street as they get a better brand and store experience. The demand is high in Tier 1 and 2 cities.
In fact, Noida is becoming the hub of high streets because of better connectivity through metro rail, an excellent road network, and a vibrant residential market.
The segment has been performing extremely well riding on the innovative investment options it has come out with. One such option is the investment in pre-leased properties, which is turning out to be a popular form of investment in Noida as the buyer is assured of a settled RoI.
The property owners earn a pre-settled rental income and the capital gain on the property that is purchased. Both foreign and national investors, UHNIs and HNIs, actively exploring this asset type. The most important aspect of investing in commercial property is to look at the location. The proximity to the metro and residential projects are important for a good ROI.