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Is Buying a Commercial Property in Mumbai a Good Investment? Read On To Find Out

Blox Social
Posted on
May 16, 2023

Mumbai is the financial capital of the country. Each year, hundreds of thousands of new businesses take shape, and some of the major domestic and multinational corporations expand operations in the city. The city's estimated GDP in 2023 is about USD 310 billion, making it one of the wealthiest cities in the world. What this means for real estate investors is a wonderful opportunity to invest in commercial properties in Mumbai. These include shops, warehouses, office spaces, co-working spaces, and retail outlets or showrooms in shopping complexes.

Let us look at some key advantages of investing in commercial real estate.

  • Commercial real estate is often available at a premium over residential real estate. This makes your financial investment larger, but the greatest advantage is that the income from this investment is steady and only likely to appreciate. Businesses and commercial enterprises are always looking for spaces to rent or lease. As an investor, you can expect the demand to remain on a steady uptick, particularly in business districts like Andheri and the Bandra-Kurla Corridor. According to a recent survey, commercial properties in Mumbai offer an average rental yield of 7.6%, and this income rises with time.
  • The asset appreciation of commercial spaces like showrooms and warehouses in Mumbai brings glad tidings to investors. The capital appreciation in commercial properties is higher than in residential real estate, and with property management services becoming more popular, this segment of the real estate sector is seeing considerable interest from both domestic and NRI investors. Another idea that seems to have worked out in favour of commercial real estate investors is that of fractional ownership. This means that a potential investor can put up as little as INR 25 lakhs and own equity in a mall or a large office space with the potential to earn a steady income and fabulous returns.
  • Commercial properties in Mumbai remain largely unaffected by short-term economic factors. An office space or a hotel or restaurant space in Bandra, Andheri East, or Goregaon East is unlikely to remain unoccupied for long. Steady demand is a factor that attracts a great deal of investment into commercial real estate.
  • Renting and leasing a residential property often entails a number of concerns. From vetting the tenants to ensuring steady payment and compliance with legal terms becomes the property owner's concern. In the case of commercial properties, though, property owners enjoy the benefit of robust terms of lease, occupancy, payments, and vacancy. Most commercial properties are leased on legally sound agreements.
  • Apart from the cost of the property, the investment into commercial property is very low or negligible. Most businesses or corporations lease the property and set up their own interiors. Warehouses, hotels, and restaurants invest in their own furnishings and brand building. The maintenance costs of commercial properties are low, and the income is high.

Mumbai's phenomenal growth as a financial and commercial hub of the country has contributed to the high interest of real estate investors in commercial properties. According to recent reports, nearly 70% of commercial real estate buyers are millennials who are excited by the prospect of quick capital appreciation and high returns. Therefore, buying a commercial property in Mumbai is a good idea and an essential portfolio diversification strategy for serious real estate investors.

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