Property investors prefer RoI over rental revenues

Hyderabad: Post pandemic, many people are looking at fractional ownership of commercial properties as a smart investment option. Thanks to affordable asset value and sustainable source of income. Earlier, very few companies used to offer such institutional grade commercial real estate with property management and liquidity through resale. Now, there are multiple brands doing this.

While the banks are providing around 5-7 per cent interest rates on long term fixed deposits, the branded commercial property developers are giving about 8-11 per cent return on investment (RoI). The investors need to check the track record of the builders as some of them claim to offer RoI up to 20 per cent in social media advertisements, which are not dependable.

Basically, the idea behind selling a small portion of commercial property by a realtor is to acquire funds for development of the project at a lesser interest rate when compared to the banks and other lending institutions. Instead of putting their savings in the banks, the buyers invest in commercial properties to get RoI monthly.

"Though this concept is not new, it is gaining traction after the Covid impact on the salaries of middle-class. Today, everyone is looking to have a second income and the commercial real estate allows that. However, there is a parallel demand for residential projects from the first time home buyers," said B Sunil Chandra Reddy, President of real estate body TREDA.

For those who are interested to invest in commercial real estate, there is a wide range of options available these days. Apart from investing in real estate investment trusts (REITs) and Infrastructure Investment Trusts (InvITs), they can choose to put their money in office buildings, co-working spaces, high-end restaurants, hotels, serviced apartments and other properties.

"If I invest in a second home for rental income, there will be certain expenses towards its maintenance at least twice a year. So, I chose to invest in a commercial property where I get better returns and no extra expenditure. And this RoI is apart from the capital appreciation," says Chandrashekar Reddy, who invested in Kapil Group's Kavuri Hub at Nanakramguda.

Expressing similar views, another investor Ramesh Vuppala said, "I have invested in World Trade Center (WTC) at Shamshabad. Right from the first month, I am regularly getting the RoI directly into my account without any delay. Except the TDS (tax deducted at source), there are no other charges for the property management services."

WTC Visakhapatnam is also coming up with the same concept. Hyderabad One, Mahaveer Gateway and SAS I Tower are some of the commercial hubs in Nanakramguda, Hyderabad offering assured monthly rentals as RoI to the investors. Shanta Sriram's Vasavi SkyCity in Gachibowli and Vamsiram Builders' Jyothi Granules in Kondapur also give guaranteed rents.

Other than these projects directly from the builders and developers, numerous tech-enabled platforms like hBits, Assetmonk, MYRE Capital, Property Share, Bhive, Invest Corner and Square Select Estates are offering fractional investment opportunity to their customers in premium pre-leased commercial real estate assets with low ticket sizes and personalised services.