Commercial property in Noida offers a wide range of investment opportunities for buyers. If you’re thinking of investing in commercial property, it is important to know the different types of commercial property investment options in Noida. In this article, we’ll take a look at the different types of commercial property investment in Noida and what they entail.
Development types in Noida for commercial investment
Commercial property investors in Noida have a variety of investment opportunities available to them, depending on the type of development they are interested in. Commercial properties can be broadly classified into three categories, based on the land use defined in the Noida Master Plan:
- Within residential developments
- Within IT/ITES developments
- Within commercial developments
Each with its own set of benefits and drawbacks. As a commercial property investor in Noida, it is important to understand the different types of developments, before making an investment decision.
Commercial property investment within residential developments
Commercial property in residential developments can be a great investment. These types of properties offer several benefits, including a ready-made customer base, restricted competition, and limited supply, as only 1% of the FAR (Floor area ratio), within the development can be used for commercial purposes. However, there are some things to keep in mind when considering this type of investment.
One potential downside is that commercial properties within residential developments typically have small floorplans, in the range of 100-1,000 square feet. This can limit the types of businesses that can occupy the space and may not be ideal for large businesses.
Another consideration is that these commercial properties typically have a limited catchment area, as they are usually, only accessible to residents of the development.
Overall, commercial properties within residential developments can be a good choice for investors who are looking for a smaller investment with relatively low risk.
Property investments within IT/ITES developments
IT/ITES property investments can be great for those looking to be in the heart of Noida’s action. As per the building by-laws and IT/ ITES policy of Noida, these developments are primarily meant for IT/ ITES or ancillary activities, and only 10-25% of the total area (depending upon the size of the land) may be used for support commercial, residential or institutional use.
Commercial shops are also available in IT/ITES developments in Noida. While these properties can be a great investment, it’s important to be aware of the potential downsides as well. With such a high concentration of IT/ITES activity, these areas can be quite noisy and crowded. Additionally, because these developments are meant primarily for office use, they may lack some of the amenities that you would find in a purpose-built commercial development.
Property investments within commercial developments
Commercial developments are developed on commercial land use and all commercial activities (as defined in the building by laws of Noida) are permitted in these developments.
This makes them ideal for businesses or individuals looking to invest in office space, shops, studios, or other commercial ventures. Commercial developments in Noida also offer a range of amenities and facilities that make them attractive to investors Some of the key benefits of investing in commercial developments in Noida include the potential for high returns, a wide variety of investment options, and the city’s favorable demography and high purchasing power.
However, there are also some risks to be aware of when investing in commercial developments in Noida, such as the possibility of changes in government policy affecting the sector.
Key Difference between IT/ ITES and commercial buildings
Commercial real estate in Noida is classified under various heads. Commercial, office, and retail are the most common property types that you come across while dealing with commercial spaces. Then what’s an IT/ITES building? Well, this latest variety of commercial buildings has become quite popular these days.
An IT/ITES building is a Commercial Space where Information Technology or related services are carried out. The prime objective of such buildings is to promote the growth and expansion of Information Technology in India. On the other hand, Commercial Buildings can be used for carrying out any sort of business activity. Commercial Buildings can be used for shops, offices, restaurants, warehouses, showrooms, and a host of other purposes.
There is a ceiling in the Commercial activity allowed in IT/ITES developments. Commercial activity is not the main usage and thus it should be ancillary. It is important to follow these guidelines while setting up commercial property in Noida so that the main objective of IT/ ITES development is not hampered.
An IT/ITES building is typically characterized by larger floor plates, centralized air conditioning, high-speed Internet connectivity, power backup facilities, and state-of-the-art security systems. Commercial buildings may or may not have all these features. Another key difference between an IT/ITES building and a commercial one is that an IT/ITES space is usually leased out to IT companies on a long-term basis whereas a Commercial Building can be leased out to anybody for any purpose on a short as well as long-term basis.
Physical attributes of Commercial products in Noida
As a Commercial property investor in Noida, you may be wondering what the difference is between lockable and non-lockable spaces. Here are some highlights of the pros and cons of each type of space.
Lockable Space
These are commercial units that a buyer is given physical possession of, which can be used for various purposes. There are some advantages and disadvantages to consider before investing in a lockable space
Pros:
- You have full control over how the space is used and what goes on inside
- Can be used for storage, office space, or other commercial purposes as defined by the development type
- May be leased out to generate rental income or can be self-used
Cons:
- You are responsible for the maintenance and upkeep of the property
- Security may be a concern
- Lockable spaces can be more expensive than other types of commercial property
- May be difficult to find tenants if the location is not desirable.
Lockable spaces can be a good option for those who want more control over their investment, but they come with some risks that should be considered before making a decision.
Non-Lockable Space
This type of space is a part of a larger format which is then divided into smaller spaces and then sold to investors. The developer then leases it to a brand or large occupier. Rent is then proportionately distributed to the investors of the spaces. There are some pros and cons to investing in nonlockable space:
Pros:
- You don’t have to worry about leasing the space yourself, as the developer will take care of that for you.
- You can make a good and consistent return on investment if the space is leased to a high-paying tenant.
- Typically, the maintenance charges are borne by the tenant or developer
- Investments in nonlockable spaces usually come with a minimum rental commitment by the developer for a fixed tenure post possession, after which the actual rent as received by the investor
Cons:
- You may not have much control over who leases the space, or what they do with it.
- If the space is not leased, you will not receive any rent, after the commitment period.
- There is always the possibility that the tenant may not pay their rent on time, which could impact your return on investment, after the commitment period.
Overall, investing in nonlockable space can be a good way to make money, but there are some risks involved. Make sure you do your research before making any decisions.
Product types for commercial investments
There are different commercial property types in Noida for investment purposes. Office spaces, retail shops, and Serviced Studios are some of the most popular options. Commercial investments can be made for several purposes such as speculative trading, long-term renting or leasing, or even for personal use. The following are the different types of commercial property for investment purposes in Noida
Offices:
Office space is one of the most popular categories of commercial investments. Large offices are available in IT/ ITES spaces whereas relatively smaller offices are present in commercial developments. Offices are also permitted in commercial areas in housing societies but they are generally not preferred on account of locations and sizes. These are a mix of large and medium spaces that can be used for several purposes such as housing businesses, IT/ITES offices, and other professional services. There is a great demand for office spaces in Noida due to the presence of a large number of IT /ITES companies and start-ups in the city.
Retail Shops:
Retail constitutes shops, food courts, multiplexes, etc. that are leased out to retail tenants. Shops or retail areas are available in residential societies, commercial, and IT/ ITES developments in Noida. Shops in residential societies are smaller in size whereas there is a limited retail area in IT/ ITES developments. Retail space in large formats is available in commercial developments in form of mixed-use or mall developments. Retail shops are generally located in high-traffic areas such as shopping malls, marketplaces, and other busy areas.
Serviced Studios:
Serviced studios are a type of commercial property that is becoming increasingly popular in Noida. They are present in large IT/ ITES developments as well as in commercial developments. These can be for self-use or for leasing purposes. These are furnished and serviced spaces that can be leased out to hospitality operators on a long-term basis. Serviced studios offer advantages such as flexibility, affordability, and convenience.
Payment plans in commercial property investments in Noida
Commercial property in Noida offers a variety of payment plans to choose from based on an investor’s needs. The three main types of payment plans are construction-linked, assured return, and possession linked.
Construction linked plan or CLP:
In a construction-linked payment plan, the payment to be made by the buyer is linked to the construction milestone of the project. Bank loans can usually be availed in this payment plan.
Assured return plan:
In an assured return payment plan, the developer offers a certain return on investment for a fixed period or till possession, which starts from the date of bullet payments received. In this payment plan, generally, a higher initial payout is required from the investor, which is to the tune of 50% to 95% of the Basic Sales Price. The investor receives anywhere from 10%-12% return on the amount paid to the developer, usually till the offer of possession. A bank loan is generally not sought after under this payment plan.
Possession linked plan:
In the possession-linked payment plan, investors pay only 20%-40% initially, and the balance amount is paid on possession or completion of the project.
Buyers of commercial property in Noida can choose the payment plan that best suits their needs and financial planning.
Conclusion
The city of Noida offers several advantages for those looking to invest in commercial property. These include a large pool of potential tenants, good infrastructure, and a favorable business environment. It can be a great investment option for those looking to make long-term investments. There are a variety of developments, product types, and payment plans available to choose from based on an investor’s needs. If you are looking for more information on Commercial property in Noida, then consult with KnowbleR today. We can provide you with all the details you need to make an informed decision for your property buying.
Also read Commercial Property Investment in Noida, Upcoming and Existing Options and Luxury Housing Property in Noida: Upcoming Existing and trends
