Commercial Real Estate is an Opportunity of the Future in Kerala

Commercial real estate is definitely an upcoming opportunity that is coming up in the near future in Kerala. As most Malayalees prioritize land, house and apartments in that order when it comes to investing in property, most often than not the predominant thought in mind is one of residential real estate. 

What our market research team is sensing of late is a growing demand and large number of enquiries coming our way for commercial real estate spaces in Trivandrum and other parts of Kerala. One of the customers we are working along with on property development has multiple pockets of land in locations like Sreekaryam and Kesavadasapuram. The objective here was to develop a land which is usually more than 20 cents in size for a commercial real estate development. 

So why is commercial real estate hot and happening? Starbucks coffee chain, one of the biggest known brands in the world entered India this week with the opening of its first coffee shop in Mumbai. Walmart is getting ready for its entry into India and looking into end 2013 or early 2014 for all pending issues in FDI in retail to be resolved. Sooner than later the entry of these big retail chains is going to become a reality.  Just a few days back US private equity firm Blackstone inked India's biggest commercial real estate acquisition deal, which will give it 50% stake in a Bangalore builder-owned portfolio of three business parks for $200 million. Blackstone bought stake in three commercial properties totalling over 10 million sq ft — Embassy Golf link and Manyata Embassy Business Park in Bangalore and Embassy Tech Zone in Pune.

What does this mean for Kerala? Although FDI in Retail would create a huge demand for retail space in large metros especially cities like Mumbai, NCR and Bangalore, there would be trickle down effect to Kochi , Thrissur, Trivandrum and other parts of Kerala given that Kerala is predominantly a consumption driven economy.  Kerala also has a big problem with scarcity of land for quality real estate. So while possession of land in good retail localities is a definite plus, you get better value for the land by developing a commercial property in the same location.

Majority of land owners in the state owning over 20 to 50 cents of land are not too sure how to proceed further due to the following reasons:

1) Building the commercial building 2) Marketing and Leasing 3) Ongoing Maintanence.

Today consultants like Nandanam help customers with all these 3 above aspects of property  management and development, making the land owner rest in peace and earn the recurring income on commercial real estate for years to come. In cities like Bangalore the commercial real estate sector has been giving annual returns of 10-15% p.a. compared to 18-20% growth in value for residential real estate. 

However where commercial real estate stands out is once a large retailer like Walmart opens shop in an area, the lease paid on a monthly basis along with the influx of new shopping outlets in the area leads to tremendous increment in land value and rentals.

For further questions on developing and promoting commercial real estate you can contact our team.