Commercial real estate (CRE) in India has emerged as an attractive investment avenue, offering rental yields of 6-10% compared to 2-3% for residential properties. With the growth of IT/ITeS, e-commerce, and the startup ecosystem, demand for quality commercial spaces continues to rise across major cities.
Types of commercial investments: Office spaces in IT parks and business centres offer the most stable returns with long-term leases (5-9 years). Retail shops in high-street locations or malls can yield higher returns but carry more risk. Warehouses and logistics parks, driven by e-commerce growth, are the newest asset class with yields of 8-10%.
Key factors to evaluate: location and connectivity (metro access is a premium), tenant quality (MNCs and listed companies preferred), lease terms (escalation clauses of 5% annually or 15% every 3 years are standard), building grade (Grade A buildings command premium rents), and REIT eligibility (well-managed commercial assets may be acquired by REITs at premium valuations).
Entry barriers are higher — commercial properties typically start at ₹50 lakhs for small offices and can go into crores for prime locations. If direct investment is beyond your budget, consider Real Estate Investment Trusts (REITs) which allow you to invest in commercial real estate with as little as ₹10,000-15,000.