Why Commercial Properties more preferable than Residential for Investment in Pune?

Admin 23 Apr 2024 2,717 Views
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Pune has grown steadily into an IT business hub in recent years. Properties in Pune are attracting the attention of many investors worldwide. The city is now a profitable alternative to the expensive market of Mumbai. Commercial property in Pune is appreciated to grow at a rate of about 15 percent. 

The IT, start-up culture, manufacturing, and automobile industries have increased the need for the number of properties for sale in Pune. More industries also mean an increased workforce. Hence the requirement for residential properties in Pune is also increasing with the need for office spaces to rent/buy

Reasons to Invest in Commercial Properties in Pune 

Higher Returns on Investment (ROI)

Residential tenants change frequently, but commercial tenants sign much longer contracts. These contracts are sometimes valid for decades or more. This ensures a steady income from the commercial property. Also, the rents are much higher than those of residential properties. Hence, the overall ROI is higher and more regular.

● High Annual Rental Appreciation

Recent research statistics state that the annual rental appreciation for commercial properties has been 8-11 percent. This is much more than the residential, which grew between 1.5 to 3.5 percent. Using tools like Real Estate investment trust (REIT), working-class Indians can now invest in commercial properties and enjoy a percentage of the annual appreciation.  

● Business Opportunities

Pune ranked number two in the EOL (ease of living index) in 2021, only after Bengaluru. The cost of living in Pune is much less than in Mumbai or Bengaluru. This means more professionals will get attracted to the city to make it their home. That, in turn, leads to more businesses in the city. Hence, this loop has led to overall growth in business opportunities in the city. 

● Proliferating Educational Sector

Pune is now famous as the Oxford of the East. From sciences to arts, finance, and commerce, Pune has renowned educational institutes for each field. Both national and international students flock to Pune for their education. This results in a thriving economy dependent on the education industry.

● Various Commercial Projects

● Areas like Hinjewadi, Baner, Wakad, etc., are the most prominent IT hubs of the city. Hence, numerous commercial projects like massive IT parks, shopping malls, restaurant chains, etc., are flourishing in these areas. The IT boom also demands new options like co-working spaces for sale/rent. Most of these commercial projects are Real Estate Regulatory Authority (RERA) registered. That also ensures the safety of your investment. They offer both offices and shops on sale/rent with world-class facilities. 

Must Read Property Rates and Best Areas to Live in Pune    

Commercial Vs Residential: Which One is Better to Invest

Commercial real estate is a broad term that includes space for businesses such as retail, offices, and industries. In layman's terms, any property used only for business purposes is commercial real estate (CRE). On the other hand, residential real estate (RRE) includes housing properties for sale/rentThe ROI of commercial real estate is three times more than residential real estate. The annual rental appreciation for commercial properties is also more than for residential. 

An advantage of investing in RRE is that you need much less capital. Banks also tend to loan only a small amount of the total cost to invest in CRE. Whereas in the case of RRE, they are ready to loan out the total cost. This is because of the lesser size of property and value. The demand for rental properties is also higher. This is because everyone needs a place to stay. Because of the large pool of buyers and renters, the leasing process also becomes more accessible.

However, the price growth in Pune residential properties has slowed since 2014. This leads to stagnancy in the value of a residential property. The value then decreases over time. On the other hand, commercial properties have a lifetime asset value appreciation. This is because new industries keep coming up.

In the case of commercial properties, the rents are steadier. The lease contract is also more rigid and long-term. That means tenants are almost always available. Commercial properties also tend to return more gross revenue as the owners don't have to pay for regular maintenance. 

Investing in either will depend on two main factors: the risk involved and the end goal. However, investing in commercial properties without having large capital is now possible. 

Frequently Asked Questions

  1. Why is Pune the Best Choice for Commercial Real Estate?

Commercial real estate investment can be very profitable in a booming market like Pune. Here are some of the reasons why Pune is the best choice for Commercial Real Estate.

● Pune is now a major IT and development hub. The demand for commercial properties for sale in Pune is also increasing with the industrial estates in the city.

● Enhanced education infrastructure is leading to more requirements for commercial properties for institutions.

● The increased workforce attracts various food and restaurant chains to bring their business to Pune.

● The ROI is more, and the annual appreciation of asset value is also more than residential properties.

  2. Which Area is Best for Property Investment in Pune?

Real estate investment depends on the amenities which are nearby the property. IT parks, hospitals, shopping malls, supermarkets, and educational institutes make an area a great place for investment.

With all these factors in mind, here are the five areas to invest in the best properties in Pune

● Hinjewadi: It is the largest IT hub in Pune. There are massive IT parks housing offices of MNCs like Infosys, Wipro, Cognizant, etc. The 

● Kharadi: It is in the vicinity of prominent areas like Viman Nagar, Koregoan Park, etc. It also has good connectivity by road and rail. 

● Undri: It transformed from a quiet neighbourhood of Kondhwa to an up-and-coming suburban area of South Pune. 

● Baner: It lies on the western side of Pune. It has emerged as a great alternative to the saturated real estate market of central Pune. 

● Wakad: There has been a constant price appreciation of property in Wakad. It is because of its proximity to the IT and industrial centres. 

About Author

Jatin Dubey

An enthusiastic content writer who is a law graduate and has been working as Real Estate Consultant for around 9 years.
He has worked with top Real Estate Agencies and Builders in Delhi, Bangalore and Pune. His skills to perform market analysis and explore high potential localities has helped many clients in the past.

An enthusiastic content writer who is a law graduate and has been working as Real Estate Consultant for around 9 years.
He has worked with top Real Estate Agencies and Builders in Delhi, Bangalore and Pune. His skills to perform market analysis and explore high potential localities has helped many clients in the past.

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