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Advantages of investing in commercial land plots
Advantages of investing in commercial land plots

December 15, 2021

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Benefits of investing in a commercial plot and developing a Grade A asset on it:

  • Stable rent yielding assets along with the potential for capital appreciation
    • Investment in commercial assets are suitable from a long-term horizon as returns accrue over a longer period of holding in terms of rental income and value appreciation
    • Asset once leased after construction to large corporate clientele carries a stabilized net income on an annual basis. This facilitates in raising lower-cost lease rental discounting (LRDs).
    • While commercial development entails heavy investment, in the beginning, stabilized annual income flows can help reap the benefits of higher capital / terminal values during exit.
  • Higher rental yield than residential developments
    • Commercial developments can potentially fetch a rental yield of 8% and above unlike residential developments carrying a typical yield of 2-3%
  • Direct investment in the land also results in value appreciation over time
    • Typically, the economic growth of an emerging location has a direct and a positive impact on the land values and the investor can enjoy the benefits depending upon the timing and location of the investment
    • Conversion into other land uses can fetch capital appreciation depending upon other market factors such as availability of land, demand scenario, etc.
    • Most of the local development regulations norms provide for the conversion of commercial land for residential developments
    • Investors can snap up land parcels at attractive valuations
  • Grade A commercial properties are now REITable and this opens up avenues for large institutional and retail investors.
  • Commercial office assets with higher occupancy and in a better location are relatively more insulated to economic shocks as regular income flow is largely ensured.

- By Vimal Nadar, Senior Director and Head of Research, Colliers India

For further information, please visit:

https://www.colliers.com/en-in 

https://www.linkedin.com/company/colliers/ 

Vimal Nadar, Colliers India


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Colliers (NASDAQ, TSX: CIGI) is a leading diversified professional services and investment management company. With operations in 66 countries, our 18,000 enterprising professionals work collaboratively to provide expert real estate and investment advice to clients. For more than 28 years, our experienced leadership with significant inside ownership has delivered compound annual investment returns of approximately 20% for shareholders. With annual revenues of $4.5 billion and $98 billion of assets under management, Colliers maximizes the potential of property and real assets to accelerate the success of our clients, our investors, and our people. Learn more at corporate.colliers.com, Twitter @Colliers or LinkedIn.

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