Vacancy levels a key for commercial investment in Delhi NCR
There are several criteria to be considered before one takes a leap into the highly dynamic commercial market.
Jun 08, 2013
Source : The Times of India


DELHI : Investing in a commercial property is a tough decision to make. If unplanned, one may have to bear high losses. And when you are thinking of investing in a metro city like Delhi-NCR, the risk factor is even higher. There are several criteria to be considered before one takes a leap into the highly dynamic commercial market. For instance, prevailing vacancy levels in different locations could be a key factor.

Ravi Ahuja, Executive Director, Cushman and Wakefield explains, “The size of investment, risk profile of the investor and the investment term determines the choice of location. Prime locations, having lower vacancy levels, command a higher price. On the other hand, an investor may get a good deal in locations with higher vacancies which indicate subdued demand.” Thus, both options may be explored by an investor.

One needs to make an informed choice between high initial capital investment and recovering it through good rental returns and lower initial capital investment with lower rental returns. In the former case, due to high demand, vacancy levels are low and thus capital values are high while, in the latter option, due to reduced demand capital values would be reasonable.

“For instance, adds Ahuja, “Average vacancy levels in locations such as Sohna Road and Udyog Vihar in Gurgaon and Noida Expressway, are significantly high at 30-40 per cent. However, if we look at prime locations such as Cyber City and Golf Course Road in Gurgaon, vacancy levels are at 9-12 per cent.
Low vacancy levels may lure you to invest as the capital values would be low too. However, one needs to be cautious. Vikas Raj, Director, Cosmic Group explains why, “Take the case of Udyog Vihar. The vacancy levels are low in this area due to various reasons. To start with, it is an industrial area and thus MNCs do not prefer setting up their office here. Moreover, the location largely consists of large plots meant purely for industrial and IT/ITeS use which can only be used for captive purpose. This implies that in case one buys land or a building, it cannot be leased out to multiple parties but can only be housed by a single company.”

Thus, investing in commercial properties on the basis of vacancy levels can be tricky and is not without risks. However, if planned diligently, the level of vacancy in a commercial destination may be used to one’s advantage in gaining maximum returns vis-à-vis the capital investment.

Latest Realty News

Builder held in Mumbai for cheating Delhiites of Rs 25 crore
Jun 08, 2013
DELHI: A chef-turned-builder, who allegedly cheated around 3,000 investors of Rs 25 crore by promising residential plots in Navi Mumbai, has been arrested from Mumbai, police said today.
Relief to builders, Centre relaxes green norms for high-rises
Jun 08, 2013
DELHI: In what will be a big relief to builders in tightly-packed cities such as Mumbai, the environment ministry has done away with green clearances for high-rise buildings based on the width of the roads that they fall by the side of and the distance from fire-stations. It has left it to the state government to makes rules as they deem fit.
‘Investment in IT corridors can reap good benefits’
Jun 08, 2013
DELHI: The real estate sector in India is on a high growth path, and IT industry has a major role to play. The influx of IT set-ups across India has given a push to the demand and supply of residential as well commercial space in the country.
Real estate bill will empower consumer
Jun 08, 2013
DELHI: Five years or so in the making, the Real Estate Regulation and Development (RERD) Bill has finally been cleared by the Cabinet.
Real estate bill leaves developers unhappy
Jun 08, 2013
DELHI: Developers and builders have raised concern about some of the provisions of the Real Estate (Regulation and Development) Bill and said stringent rules such as launching projects only after getting all statutory clearances would delay projects and push-up costs.
Real transparency: Real estate bill will empower consumer
Jun 07, 2013
DELHI: Five years or so in the making, the Real Estate Regulation and Development ( RERD) Bill has finally been cleared by the Cabinet.
Homebuyers fear anti-forces may weaken bill
Jun 07, 2013
NOIDA: Even though homebuyers in GautamBudhNagar district have hailed the passing of the Real Estate Regulatory Bill by the Union Cabinet, they are sceptical and fear that some 'anti-forces' may weaken the proposal.
Realty regulatory bill should cover all stakeholders: CREDAI
Jun 07, 2013
DELHI: The bill to regulate real estate sector should cover the authorities responsible for giving approvals for projects, besides developers community, realtors' body CREDAI said today.
MCG to allow division of plots less than 1,000sqm
Jun 07, 2013
DELHI: The city municipal corporation has sent a proposal to the state authorities asking them to allow sub-division of plots measuring less than 1,000 square metres at a nominal fee. At present, owners whose plot is lass than 1,000 square metres cannot further divide it.
Real Estate Regulatory Bill may become breeding ground of corruption, says CREDAI chairman
Jun 06, 2013
MUMBAI: Stating that the Real Estate Regulatory Bill approved by the Union Cabinet seeks to whip only errant developers, realtors apex body CREDAI Chairman Mr. Lalit Kumar Jain has expressed fear that it could encourage corruption instead of curtailing the social menace.

Latest Realty News Of State

Realty Talk's