The latest real estate transactions suggest that people are choosing pre-leased commercial property over contemporary real estate investments to maximize returns. If we analyze the current commercial real estate market in Noida and Greater Noida, it is evident that pre-leased properties are the best high-yield investment option, capable of generating long-term returns without any risk factor. The best part of owning a pre-leased property is fixed monthly earnings from day one, as these spaces are already rented. The stable rental income, the potential for capital appreciation, and zero-risk involvement make it the most popular commercial asset class. This article will help you understand the benefits of investing in pre-leased commercial property, including the types of properties.
What are pre-leased commercial properties?
Pre-leased commercial properties are spaces already rented out under specific terms and conditions. This concept has become a popular investment trend, particularly in urban areas where commercial malls, high-street retail, and new-age luxury shops are in demand. These properties include office spaces, retail shops, or mixed-use spaces leased to banks, IT companies, retail businesses, or restaurants.
Investors who choose to invest in pre-leased properties don’t need to search for tenants, as the spaces are already occupied. This generates a guaranteed fixed monthly income, which can be utilized for other purposes. If the ownership of the property changes, the lease contract and the property title are transferred to the new owner.
IThum World offers a range of state-of-the-art pre-leased commercial spaces in Noida and Greater Noida. Investors have diverse opportunities in office spaces, retail shops, restaurants, food courts, a multiplex, and an entertainment zone for securing long-term growth.
Why You Should Invest in Pre-leased Commercial Property?
There are several benefits to investing in pre-leased properties, as explained here:
Assured Returns
Pre-leased properties provide a guaranteed regular income in the form of monthly rent from the day of purchase. Once you finalize the deal and receive the lease agreement, you start earning returns, as the property is already leased to a tenant. This is the primary reason why many people are choosing pre-leased commercial real estate as an investment option.
High Rental Yield
As per the lease contract, there are specific terms and conditions regarding the lease period, monthly rental, and the rate of annual increment. The annual increment in monthly rent may vary from 7% to 10%, depending on the property’s location and market dynamics. Generally, pre-leased commercial properties offer higher returns compared to residential properties.
Capital Appreciation
If you own a pre-leased commercial property in a prime location, you are more likely to benefit from capital appreciation. These properties have the potential to increase in value over time. As mentioned earlier, the rate of price growth depends on factors such as the property’s location, surroundings, connectivity, and market trends. As the real estate market in the area grows, your monthly rental yields are likely to increase accordingly.
Low-risk Investment
Pre-leased commercial properties are considered low-risk because investors are assured of monthly rental yields. There is a degree of certainty in terms of returns, price appreciation, and the reliability of the tenant profile. Since the property is already rented, there’s no need to search for a tenant, reducing the risk of vacancy. Moreover, these properties often have longer lease tenures, ensuring consistent returns over a fixed period.
Tax Benefits
In addition to the advantages above, pre-leased commercial properties offer specific tax benefits. Investors can claim tax exemptions on the rental income earned from such properties. Additionally, they may also deduct interest paid on loans and depreciation. However, it’s essential to be aware of the tax liabilities on rental income.
Types of Pre-leased Commercial Properties
Investors consider the pre-leased properties in different segments, as detailed below:
Office Spaces
Pre-leased office spaces are the most common type of property that today’s investors rely on. These properties include high-rise office towers, builder floors, or individual office units leased to corporate houses, companies, or start-ups for office purposes. Commercial lease agreements are often signed for long terms, making these investments lucrative opportunities for those seeking stable monthly rental income. However, returns on investment may vary depending on the property’s location.
Retail Spaces
In a growing market where high-end shopping centres, commercial malls, supermarkets, and department stores are new shopping destinations, pre-leased retail properties have emerged as high-yield investments. Investors receive a monthly rental as per the lease agreement, generating a consistent source of passive income.
Hospitality Sector Properties
Hotels, restaurants, food courts, resorts, guesthouses, and other hospitality establishments also provide pre-leased investment opportunities. These properties are usually located in tourist destinations, business districts, or areas with high business activity.
Industrial Spaces
Industrial properties, such as warehouses, factories, and manufacturing units leased to companies for production and storage needs, also offer pre-leased investment options. Investors can choose these properties for secure returns. Such properties are generally located on the outskirts of cities or in industrial areas.
Healthcare Spaces
This segment includes hospitals, medical shops, nursing homes, and diagnostic centres leased to healthcare business owners. Individual investors can opt for healthcare spaces as a pre-leased investment option.
Mixed-Use Spaces
This segment attracts higher investments as it offers a comprehensive solution for the urban real estate market. Mixed-use commercial spaces typically combine office spaces, retail shops, restaurants, and banking facilities under one roof. Investing in mixed-use properties, especially in prime locations, can be an ideal source of long-term income.
Stay tuned for the latest investment opportunities in Noida and Greater Noida.