The earth is changing speedily, with outside forces like covid-19, which is making unchartered environments. It is essential that all investors of offices monitor the current situation and state of affairs in India, and after that, they should invest accordingly. So, where is the opportunity to invest in the available office properties?
Investment in grade locations
If we go into a situation of danger, a market only rewards those who choose only the best locations. For those investors who lend, this is a quality flight for them. And the location is everything in real Estate. One of the best location to invest in Noida is in Bhutani Cyberthum. The only way to fill a small or lesser location is with a reduced rent, which creates a challenging situation for you when Class A rents ease. It also means you will constantly be decreasing rents as the condition and desirableness of your property wanes.
Solid infrastructure
Always remember not to buy properties that are in poor condition because what you are going to earn from the office property all that are earning will go into repairing, maintenance, and capital expenditure. Those offices will cut your profit and scare away all future buyers and lenders. They require huge roofs and other issues. And that’s why the poorly built property can become a low-profit investment for you.
The credit quality of tenants
It will be profitable to stick with the properties with A1 grade occupants; they will pay you the rent in both good and bad times. Leasing for a long term with a sketchy tenant is not marketable. It would be best if you had those tenets who have a good record of paying rent on time. What they say is not necessary. What matters is that they have a well-proven ability to pay rent on time.
Right timing
Timing is vital in the real estate industry. All investors want to buy at a low cost and sell at a high cost, not vice versa. When there is a cyclical high in that market, never buy property, but when the price is stable, it is the right time to buy. And how to when? Let’s see about the Cap rates. A reasonable cap rate for the office property might be around 7% traditionally in one market, so the thing is, you should not buy whenever it’s less than it. The thing to remember is that there should be a 20% or higher of it correction in the market. So thus, you raise 20% value for getting your money back,
Safe spreads points
If we talk about cap rates, you always need to stay on the right side of the spread on your deal. Speed is just a difference between the cap rate and interest rate on your loan like Orion One32 if we see the cash returns on different points, so it is like, 20% on A3 point, 15% on two-point, 10% on 1st point. So always get a minimum of 2 points to maintain a safe impact against any problems.
Conclusion
It is still profitable to invent in office properties, important is that you make a graph that is safe and has all mega trends working in your favor. This will take you to profit.
Read More: What financial goals do you have for property investment in Australia?
