New Delhi, India

Amid the volatility in the stock market, mutual funds, and cryptocurrencies, investors are on the lookout to invest their money in something more stable in terms of profit-churning. 

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In this hunt, something which has emerged as a promising but stable investment is commercial real estate (CRE), which refers to the property used for business-related purposes or for workspace. 

Generally, tenants lease out commercial real estate for conducting income-generating activities.

Ways to invest in commercial real estate?

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There are two ways in which investments are made in commercial real estate. One is direct investment, in which the investor gets ownership of the physical property.

Also Read: Money-Wise | Real estate vs stocks: Which investment has more promising returns for you?

Investment in commercial real estate best suits people who either have good knowledge of the industry or the capacity to employ firms for doing that. This is a high-risk but high-reward real estate investment.

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Investors can also indirectly invest in the commercial real estate market by investing in ownership of securities like exchange-traded funds (ETFs) or real estate investment trusts (REITs), which invest in commercial property-related stocks.

The investors can also invest in companies catering to the commercial real estate market, such as realtors and banks.

Experts decode how promising is investing in CRE

The investment in commercial real estate is indeed stable, but is it profitable enough? Here's what experts suggest. 

Svaraj Anand, COO, Neo developers

  • Commercial real estate (CRE) offers stable and predictable returns. Its stability stems from the asset’s intrinsic value—physical properties in economically active areas tend to appreciate over time. 
  • CRE provides investors with fixed rental income and the potential for significant capital appreciation, making it a proven method for wealth creation.
  • One of CRE’s major advantages is its insulation from market fluctuations. Commercial properties are often leased on long-term contracts, ensuring consistent rental income even during short-term economic downturns. 
  • Additional benefits include tax advantages like depreciation, and investors can diversify further by allocating funds to REITs (Real Estate Investment Trusts), which combine liquidity with security.

Also Read: Money-Wise: Investing beyond borders? These 5 countries are best real estate investment destinations

Gunjan Goel, Director, Goel Ganga Developments

  • Commercial properties in good markets such as Mumbai, Pune, Bengaluru and Hyderabad are not as speculative as cryptocurrencies and have high rental yield and good appreciation in the long run. 
  • The introduction of RERA and GST has also increased transparency in the sector, moving it towards being a more regulated sphere, which enhances security for commercial real estate investments.
  • After the pandemic, there has been a spike in institutional investment into commercial spaces, and with the creation of hybrid work models, it can be said that the sector is safer as compared to investing in the high-risk crypto and stock markets.

Aman Gupta, Director, RPS Group

  • New developments such as data centres and co-working spaces, logistics parks, and others have opened new avenues for investments beyond just offices. 
  • Government policies such as ‘Make in India’ as well as continuing shifts in the business environment towards the digital economy are supporting the persistent commercial property market. 
  • As opposed to the volatile markets, commercial real estate has intrinsic value, a potential for long-term appreciation, and also protects against inflation. 

However, one should always remember that there are some disadvantages involved in every kind of investment. Investing in commercial real estate has its own drawbacks, like heavy investment, fewer tax incentives, costlier loans, and maintenance woes.