Commercial Real Estate Investments are lucrative business areas, not only in India but anywhere in the world. With increasing Skyscrapers and buildings being built faster than ever before, real estate investments need the hour. More and more private agencies are entering the Commercial Real Estate business making it highly competitive and thus increasing the standard higher than ever before.
Some of the rules to be followed while buying a real estate includes:-
- Proper selection of Locations
- Analyzing the demand and the supply position.
- Quality of the Tenant in the area.
- Quality of the Real Estate in the area.
- Rent structure of the property
- Interior of the property
- Lease Structure if applicable
- Security Deposits, and
- Risk of the Contract
With Governments allowance of up to 100% Foreign Direct Investment (FDI) for townships and settlement development projects, the growth in this area has known no bounds. Under the Government's coveted Housing for All schemes, 60 million houses are set to build with 40 million in the rural and the rest 20 million in urban areas by the year 2022.
The top three and most famous Commercial Real Estate Investment and Development Companies of India are as follows: -
Godrej Properties is a part of the Godrej Group, one of the largest conglomerates in the country. Established in early 1989, Godrej Properties is one of the leading real estate developers in the commercial segment with its presence in over 12 cities. The company is involved in developing residential projects, commercial projects, retail projects, and information technology (IT) projects worldwide. The company reached its peak and witnessed its highest ever sale in the Financial Year 2020 when it delivered over 5.23 million square feet of space and added ten new projects to its portfolio of works. They signed the first Memorandum of understanding for their first project in the year 1991. From there, the company has come a long way to becoming publicly listed in the year 2010 and recording a consolidated total income of Rs. 2829 Cr (USD 401.33 Million) in the year 2020. Some of Godrej Properties' famous projects include township projects in Pune and Maharashtra, partnership with Taj Hotels to develop world-class Taj brand hotels, etc.
SOBHA Limited is one of the most respected Real Estate brands in India and is known to operate on a PAN India level. Established on August 7th, 1995, the company believes in its famous tagline, "Passion at Work." It is the only backward integrated real estate player in the country that works with a vision to transform how people perceive quality. SOBHA strived to deliver high-quality properties to its clients everywhere it goes. It is present in 27 cities and 14 states across the country. This makes it a true PAN India player in its core. With 3309 skilled employees and professionals working around the hour and 467 real estate and contractual projects completed since its inception, the company has successfully imprinted its name among top players in the Commercial Real Estate industry. Its consolidated total income stood at a whopping Rs. 3515.6 Cr in the Financial Year 2019, and this established the company among the biggies. The company changed its status from a Privately held to a Public company in 2006 when it raised Rs. 570 Cr (USD 125.86 Million) through IPO, where its issue over-subscribed by a whooping record of 127 times. Its milestone achievement includes becoming the first Real Estate company to obtain ISO 9001 certification in 1998, a project of construction of Corporate Block for Infosys Technologies Limited in Bangalore, launching the International City its first residential project in Delhi NCR, Gurgaon, etc.
DLF Building India
DLF is termed as the largest and the most famous Realty Developer in India. Founded in the year 1946 by Chaudhary Raghvendra Singh, DLF is one of the earliest players in the real estate sector. Between the years 1950 to 1964, DLF was involved in the building and developing 22 urban colonies in Delhi. DLF Building India has a track record of over 73 years and a presence across 15 states and 24 cities across India. With a building and development potential of 227 million sq.ft, the company is involved in developing residential projects and commercial projects and retail projects and information technology projects. The company is known to operate in all stages of Real Estate development that ranges from land identification and acquisition, planning and execution, to construction and even marketing of the said projects. In the Financial Year (FY) 2020, the company has registered a total income of Rs. 6888.14 Cr (USD 977.18 million). It generates most of its revenue from both sales as well as rentals of its projects. It also earns revenues as it is engaged in both power generation and transmission of that power. Some of the important milestones for DLF Building India include the development of DLF City and the development of DLF CyberCity in the years 1985 and 2003 respectively; becoming a listed company with an IPO of USD 2.25 Billion in the year 2007; commercial operations at India's first luxury mall in the year 2008; launching of DLF mall in the year 2016, etc.
The demand for Real Estate has surged in India like never before. India today ranks among the top 10 price appreciating housing markets internationally. It is so humongous that Co-living market size across India's top 30 cities is expected to grow more than double to USD 13.92 billion by 2025 from the current position where it stands at USD 6.67 Billion.
Yes, many top companies dealing in commercial real estates hire brokers to deal with multiple factors which normally is out of line for the big companies like:
- Exposure of Potential liability.
- Zoning issues.
- Liens and title issues.
- Hazardous materials.
- Requirements of Stringent insurance parameters.
- Intensive research on verifications and inspections which can be time consuming and tedious.
- Complex contracts and comprehension of the minute terms and conditions of the agreement.
Any buyer or top-rate company or brand must raise questions and do stringent verifications before buying commercial real estate from another seller. This is beneficial for these companies to gauge the correct scenario of the market and working on demand and supply of the same. Important information that should be verified are as follows:
- Overall experience, reputation and goodwill of the firm.
- The creditability and credit ratings of the company/seller.
- Thorough and detailed documentation and terms and conditions.
- Appropriate experience and sensitivity towards the property type of the business and intricacies of the commercial real estate.
- Should have access to agents and brokers being responsive and communicative.
- Should have relevant and desired information about the market, product, demand and supply.
- Complete information about financials – fees and commission, legal information and infrastructural and property details.
This is a crucial question, and one must consider many factors and considerations before deciding on the leasing or buying a commercial real estate. A detailed cost/benefit analysis should take into account things like:
- Up-front costs
- If space will be needed in 7 years, or if the company will outgrow the space
- Recurring monthly expenses and costs
- Opportunity expenses and costs
- Whether the company has the time, money and the resources to upkeep and maintain a property
- Tax benefits and exclusions
- If there is significant capital ro keep invested ina commercial real estate, of it is time to retain the amount and reinvest it somewhere else
- If the return on investment in commercial real estate is good enough or is it the appropriate time to give it up and invest elsewhere
- If the brand or company considers flexibility more important and significant in the commercial real estate sector or stability
- Asset price and value appreciation
- Current trends, demand and supply of the real estate in the market.
- Growth in business equity
- Income earned at the time of sale
The top companies dealing in Real Estate in India are:
- DLF Ltd
- Prestige Estates Projects Ltd
- NBCC India Ltd
- Indiabulls Real Estate Ltd
- Brigade Enterprises Ltd
- Oberoi Realty Ltd
- Phoenix Mills Ltd.
- Godrej Properties Ltd
- Omaxe Ltd
- Sunteck Realty Ltd
Yes. Stamp duty needs to be charged, ranging from 5% to 12% in all states. There is a concession of 1-2% provided to females in few states like Haryana, Rajasthan and Delhi.
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