#3 - The Future of Commercial Real Estate
With uncertainty looming and financial sectors and industries moving in unpredictable patterns, we are indeed headed for change. Changes that will rewrite the way we’re used to functioning and seeing the world. “A new normal” as it's being referred to is in the making and what does this new normal have in store for us?
Looking at the way all the industries are adopting and adapting to this change, the real estate market isn’t far behind. These times though grim, also have a very exciting side to them as well. What does this mean for Commercial Real Estate? What does the future of Commercial Real Estate look like?
With the population realizing the difference between the yield and financial benefit of a Commercial property over a Residential one, it isn’t long before investing in a second flat is rendered obsolete. By this, I mean, buying a second home to rent out isn’t as wise as investing in commercial real estate in terms of an ROI point of view.
While we’ve already discussed and calculated the huge difference between the yield between Residential and Commercial Real Estate, this blog will further look into the future possibilities for commercial real estate to justify this.
Though the pandemic might seem like a hard hit to commercial real estate and its investors, the future looks brighter than ever if you choose the right areas to deploy your capital into.
Start up BOOM
With the youth of the country taking interest in entrepreneurship, the number of start-ups are increasing by the day. Small businesses are finding their footing in untapped markets and scaling up at a record rate.
This will in due time force them to take up office spaces to seat the large number of employees that they are and will hire in the time to come. This calls for the requirement of huge office spaces. Be it a coworking space or an independent office, both these will require new age commercial formats to nest these companies and their fleet of employees.
The start-up world is booming and will continue to and this directly correlates to the increase in demand for commercial space.
The IT-enabled “new normal”
With e-commerce booming during the last one and a half years, the pandemic has also demanded more warehouse and storage space for inventory management that is now essential for large e-commerce conglomerates.
Even if you take into consideration the flocks that have adopted the work from home culture, data centers will be key to sustaining this way of life. Data centers facilitate an organization's shared IT operations and equipment for the purposes of storing, processing, and disseminating data and applications.
Change in the way construction is carried out
While the requirement for physical labor has gone down and so have the employment rates and need for manpower, this hasn’t necessarily reduced the capital needed for construction. The advent and focus on technological advancements have changed the way construction is carried out. Construction companies are now using construction-focused drones, hardware, 3D printing, smart wearables, pulsed radar object detection, immersive technology, and radio frequency identification (RFID). These innovative tools are primarily used to enhance the customer experience and deliver a product with a level of sophistication like never before.
We will soon begin to see structures and interior concepts that could at one time only be thought of as impractical fictitious ideas.
The emergence of India as a business hubspot will greatly impact the need for commercial infrastructure. Cheap labor, efficient labor class within the idealist age range and affordable wages are what is drawing MNC’s from all over the world to South Asia.
We’ve already seen plenty of examples with several business parks coming up all over the country. Bangalore, Noida, and Gurgaon are prime examples of this phenomenon. As this continues to happen, over time the need for modern commercial office spaces will only go up.
Fractional investments are now widely available
With the general problem of huge initial capital requirements being solved, many retail investors are now opting to go the fractional way to get their slice of the cake. By this I mean, without having to part with a huge amount of money in the range of 25 crores, investors can now begin investing in commercial real estate with an amount as low as 10 lakhs.
In all honesty, fractional and alternative investments are turning out to be the real “new normal” and now seems about the right time to get in. The lack of portfolio diversification options and small ticket size has now created an opportunistic situation that retail investors must take advantage of.
Our platform is one such that offers opportunities to get into the real estate market without the hassle of management or any overheads that would traditionally come along with a commercial property.
There are also a variety of offerings to choose from based on your personal capacity and financial outlook and needs. BHIVE is your one-stop shop for fractional and alternative investments!