Anuj Puri, Chairman – ANAROCK Property Consultants
In the past, the ROI on housing assets had been quite satisfactory and in some cases even spectacular, depending on the aptness of choice in terms of specific location, configuration, amenities and builder’s brand.
While rental yields for residential assets in India have historically been low, capital appreciation alone was a sufficiently dynamic prospect for most real estate investors.
However, the hype around residential property investment has fizzled out over the last 2-3 years, with a prolonged slowdown severely impacting capital appreciation. As of now, investors with the financial wherewithal and requisite understanding of the commercial real estate space find office assets far more attractive, and for good reason.
In the first place, office properties in the right location and project attract quality corporate tenants and can, therefore, yield very good rental returns over prolonged periods.
The average rental yield of a good commercial property falls in the range of 6%-10%, whereas the rental yield of a residential property is dismally low in the range of 1.5% – 3.5%. Simultaneously, capital appreciation can also be more than satisfactory for the right office assets.