Scope And Investment: An Interview With Mr. Nitin Chopra, Founder & CEO Of Range International Property Investments

With returns test from residential assets no longer meeting expectations of NRI investors, a majority of them are now preferring to invest in commercial real estate, especially in Mumbai, NCR, Bengaluru, Hyderabad, Chennai and Pune - currently the hottest cities for investments in Grade A offices, co-working ooffice spaces and IT parks, realty experts say.

NRIs are showing more interest in investing in commercial properties, which offer better rental yields and capital appreciation. This is because there is a rise in demand for commercial spaces in the wake of large-scale requirements and the probability of REITs formation, especially for Grade A offices, IT parks and logistics centres, says Anuj Puri, Chairman – ANAROCK Property Consultants.

The business being generated in the above mentioned cities induces a constant upward trajectory on the demand for quality office spaces, while supply is not meeting demand. That means all available high-quality office spaces are assured of tenancy.

Moreover, the strong start-up culture in India is driving up demand for shared office spaces, also known as co-working spaces. Such spaces are snapped up by start-ups which cannot afford high cost of high-quality office real estate.

The last two to three years have seen muted sales, correction in pricing (often significant) in most markets in the residential segment. This coupled with very low residential rental yields has effectively turned away investors, especially NRIs.

On the other hand, commercial market still sees healthy leasing and moderately appreciating capital rates. The yields on commercial properties are much more attractive as compared to residential. Hence, NRIs have veered towards commercial spaces in the last year or so, says Gagan Randev, National Director, Capital Markets & Investment Services at Colliers International India.