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Investors prefer pre-leased commercial assets in range of Rs 5-50 crore: Report

HNIs, and even family offices are focusing on pre-leased assets.

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Pre-leased commercial assets in the range of Rs 5 - 50 crore spread across the country's top six cities followed by tier-2 cities are high on investors’ radar, as per a report by JLL India.

Despite premium pricing, properties in metros are more in demand than their counterparts in smaller cities, the report said.

The report also pointed out that 2019 is expected to set new benchmarks in terms of new completions of commercial assets with the segment expected to touch 47 mn sq ft levels.

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Other than commercial, interest levels are also picking up for high-street retail and logistics and warehousing industry.

The key reason why investors are preferring to put in money in the metros is because these are mature markets and it is easy to get tenants and easier to liquidate compared to smaller, tier 2 markets, as per the report.

High-net-worth investors and the Uber-rich are now looking at pre-leased assets, primarily office assets. The yield for Grade A commercial properties ranges from 7.5 percent to 8.5 percent, said Vishal Ahuja, Head – Private Wealth Group, JLL India.

A closer look at the nature of these deals reveals that the range and profile of these investors vary. Increasingly, family offices are focusing on real estate asset segments, especially pre-leased assets. The market continues to witness active demand from HNIs and CXOs of corporates etc. However, this is early in the curve, but we anticipate greater participation from family offices for real estate investment opportunities, he said.

Better returns, a mature and transparent market are some of the factors that have made investors flock to the country’s commercial real estate. With commercial segment remaining the most favoured among all kinds of asset classes, high-net-worth investors and the Uber-rich are now looking at pre-leased assets, primarily office assets, with hope, he said.

The country's regulatory scenario relating to REIT has also come a long way and is now a piece of established machinery for investors. At the beginning of the year, India witnessed its first REIT listing by Blackstone-Embassy JV. The JV between Embassy Office Parks REIT includes Blackstone's assets as well as those in partnership with Embassy Group, comprising 33 million sq. ft across Mumbai, Pune, Bengaluru and Noida.

As much as 24 million sq ft of the portfolio is completed and 95 percent has been leased. This includes 11 assets—seven office parks and four buildings, the report said.

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First Published on Aug 12, 2019 04:26 pm
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