Real Estate market is expected to get a great push during Lok Sabha elections; reduction in GST, reduction in RBI announced by central government had made a huge effect in the real estate sector. After such announcements one major question which strikes an investor’s mind is, where to invest, Commercial or Residential?
Most of the investors generate a huge profit from office buildings, industrial property, medical centers, apartment buildings, farmland and warehouses. Earlier, return on investment in the residential sector was really good depending on the location and the builder’s brand. Another reason why residential properties were chosen for was because commercial properties are a bigger initial investment as compared to residential real estate requiring more maintenance and capital expenditure.
But now with the change in time and mindset of people the scenario has changed as capital and rental yields are not that great as they are expected to be that is the reason why the stagnant scenario has lead the investors take a turn towards commercial space. As in most of the situations commercial properties have a better return averaging 6-12% where as residential properties give 1-4%.
Commercial spaces often have longer lease agreement as compared to residential. Commercial properties have multiple tenants so you don’t have to rely on one. Being an investor you can reduce your taxable investment income by the amount of yearly mortgage interest. One major reason for commercial investment is that commercial real estate appreciates faster than any other investment.