Real Estate vs. Other Investments

When you think of investing, you can do it in a variety of ways including real estate, bonds, stocks, CDs, or even gold. Thanks to the array of options, it often happens that one investment choice is more lucrative than the other. Based on current market conditions, it is also important to be aware of the type of investment to avoid and when? 

Let’s take a look at real estate investment vs. other investments to help you narrow down the options that are suitable for you.

Real Estate vs. Stocks 

Stock prices are deemed to be more unpredictable as compared to real estate. The rates of stocks can fluctuate quicker than real estate prices. The instability can make you apprehensive unless you plan to purchase and hold stocks, despite the unpredictability. 

Investing in real estateissimpler and better to understand than stocks. The housing sector in India is enormous which makes the home-buying journey multifaceted. But despite the complexity, the basics are quite simple. Moreover, owning a tangible asset can make you more in control of your investment when compared to purchasing slivers of ownership in firms via shares of stocks. 

Real Estate vs. Bonds

Despite their low-risk nature, investors may realize that bonds do not deliver the same profitability when pitted against other investments, particularly real estate in India. In numerous cases, the returns could be considerably affected by the rate of inflation. On the other hand, you will observe significant real estate growth and development during inflation. 

As material and labor expenses rise, rent typically follows, resulting in real estate investors achieving greater profits during this period. Bonds are not known to deliver the best returns as real estate. Across the board, rental properties generally outperform bonds thanks to their capability to produce cash flow, even during inflation or low-interest rates. 

Real Estate vs. CDs

Despite the low-risk investment opportunity, Certificates of Deposits (CDs) typically have lower profit margins when pitted against real estate. The potential for profits in CDs is directly affected by interest rates. When they are low, investors will not be able to get a high return on investment. 

It could take approximately 5-10 years for CDs to mature. Investors will not be able to use their funds during that period. But real estate showcases more liquidity. Even if investors are not able to sell a property, you can still tap into the current equity in many ways. 

Real Estate vs. Gold

Investing in gold may be a simple process but it is a long waiting game as compared to real estate investing. Thanks to the concept of price appreciation in real estate market, you can earn revenue as you wait for an asset to escalate in value, thereby leading to a higher overall cash flow. 

In a nutshell, while stocks, bonds, CDs, or gold are solid forms of investment and each of them has its own pros and cons, real estate delivers cash flow that is directly connected to the decisions you have made. Overall, investors may observe that real estate signifies the likelihood to produce yearly cash flow and profit from appreciation over time. 

At CRE Matrix, we have assessed vital real estate data comprising residential, commercial, retail, and warehousing, across different industries in India. CRE Matrix’s product IndexTap helps in making real estate investments with its extensive catalog of residential properties in MMR. 

For more such exciting analysis and details on real estate, visit our website

Real Estate Lending 101 – What is Construction Finance?

Construction Finance has been a popular loan segment which has been keenly observed by stakeholders beyond the real estate sector as well, as it acts as a barometer of construction activity to a certain extent. CRE Matrix, through this blog article, takes you through the A to Z of construction finance.

commercial real estate

What is Construction Finance?

Real estate developers need a consistent flow of funds for numerous construction-related works at various stages of projects to guarantee the timely completion of projects. Construction Finance loan is generally intended to meet this need of real estate developers across the life cycle of their intended or ongoing construction projects against the project sales receivables.

Since they are deemed to be comparatively risky, construction loads tend to have higher interest charges as opposed to conventional mortgage loans.

Why Do Contractors Need Construction Finance? 

Construction businesses generally have huge up-front expenses that burn through cash at the commencement of a project, much before payments start rolling in. This gap makes it tough to monitor cash flow from the beginning of a job. Contractors usually require financing to progress: to pay for material expenses on larger projects, to fund new equipment, or to match escalated payroll expenses. Financing can aid construction businesses to smooth out cash flow cycles whether the economy is declining or proceeding towards a construction boom.

Features of Construction Finance 

  • Loans that can be availed by the best real estate developers/builders
  • Can be used for growing and building residential or commercial sites
  • In Tier 1/Tier 2 cities, customized offerings to suit the requirements of  developers

Benefits of Construction Finance 

  • Professional and transparent technique
  • Organizing enormous funding from banks/financial institutions arranging bank guarantees
  • Flexibility in tenor as well as offering a variety of options for repayment
  • Enable tie-ups with banks/HFCs to offer housing finance to customers (home buyers)
  • Strong and effective service delivery model that provides door stop facilities to guarantee simple and quick approval and disbursal of loans

In a nutshell, construction finance loans are usually taken out by real estate developers or homebuyers who are custom-building their own houses. After construction has concluded, the borrower can either refinance their construction loan into a permanent mortgage or acquire a new loan to repay the construction loan (occasionally referred to as the ‘end loan’). 

The borrower might only be needed to pay construction loan rates or interest on the loan while the project is still ongoing. A couple of construction finance loans could entail the balance to be paid off completely by the time the project is complete. 

CRE Matrix, via RE Loans, gives a detailed insight on construction finance loans by numerous developers across the country and the banks/NBFC/funds that provided the loans to them. CRE Matrix is the country’s most preferred authentic analytics platform that allows stakeholders to access analytics from an array of sectors. Users can assess and compare construction finance loans and do so much more on CRE Matrix platforms.

For more CRE industry insights and data research do contact us.

5 Major Forces that will Drive Commercial Real Estate Industry in India in 2022

In 2021, there has been a tremendous development in residential and commercial real estate in India. The market was already growing as the requirement for residential apartments and plots rose post nationwide lockdown. The property rates observed a huge increase in demand and prices per square foot.

commercial real estate

Apart from commercial areas that tailor to the daily or weekly needs of the residents, the corporate world has started to convey interest in mounting operations, thanks to enhancements in connectivity and anticipated economic development.

We could witness further liquidity transferred into commercial real estate this year. It is believed that the year 2022 will see a growing surge for appropriate workspaces, freehold commercial and residential properties, and new concepts that will increase returns for investors. 

As we go deeper into 2022, here are a couple of forces that will push the commercial real estate industry in India.

Residential Property Market is Expected to Rise

After an extended duration of dropping and then stabilizing, residential property rates are possibly expected to begin rising again. Approximately 5% capital value growth has been estimated for the residential property segment in India in 2022. 

Several of the supply and demand-side factors are taken into consideration and evaluated over the last decade. This drive is projected to continue in 2022 as potential homebuyers’ preferences for larger residences, improved facilities, and lucrative pricing will help seal the deals. 

Foreign Investment is Estimated to Push this Sector

Foreign Direct Investments (FDI) will continue to be a significant development driver, and the same is valid in the case of the real estate players as well. Indian real estate has managed to draw a huge amount of foreign moolah, particularly in the residential market. With RERA assuring transparency and laws permitting 100% FDI in construction, Indian real estate is observing pointed investment infusions from NRIs. 

Property Rates Projected to Rise

In 2020, approximately 1.38 lakh housing units were sold. When you pit it against the previous peak in 2014, this was considered to be a rock bottom of 60%. Nevertheless, between January and September 2021, 1.45 lakh units were sold. There was a 5% surge in sales in 2020. 

Increase in Demand for Co-working Spaces

In 2020, there was significant growth in office closures and a swift shift in ubiquitous remote employment globally. This trend carried on in 2021. However, as the vaccines started rolling out, people slowly returned to their workplaces. Thanks to the pandemic, firms have had to spend time and money investing in digital abilities to let employees work from home. 

Businesses are seeking new working approaches while allowing workplace flexibility to make sure that profitability balances well with employee well-being. The most obvious development has been the surge of a hybrid workforce across an array of workspace choices, including flexible offices. 

Growing Demand for Data Centers

The massive digital push generated by the COVID-19 pandemic has been lucrative for data centers which could still offer an approximate 15% rental yield. Firms started to modify their digital infrastructure to cater to the new work environment instantly after India went into lockdown due to the pandemic, thereby leading to a 25-35% increase in data center capacity. 

The year 2022 is also believed to observe an increase in SCO (shop-cum-office-space) concept development. These SCO plots will assist entrepreneurs to develop their business concepts by owning a commercial space at moderately placed prices with advanced amenities. Sharp investors can witness the benefits of a well-equipped setting that backs retail or office in a favorable market. Mixed-use commercial spaces will help investors in expanding their risk in the investment portfolio by making the most of the new evolving idea. 

For more CRE industry insights and data research do contact us

The ‘Mumbai’s Next CBD’ Debate Settled


BKC displaced Nariman Point as Mumbai’s CBD! Read on to know why BKC won’t be dethroned in the next 5-7 years.

Bandra Kurla Complex (BKC) has witnessed a phenomenal transformation over the last 20 years. The State Government set the ball rolling by appointing MMRDA as the special planning authority to develop BKC (Bandra Kurla Complex) as an alternative to the erstwhile CBD (Central Business District) – Nariman Point.

After initial reluctance, some of the Private and PSU Banks and companies shifted their headquarters to BKC. The National Stock Exchange opened its headquarters in BKC in 2001. Soon after, developers realized the potential and picked up land parcels in the region to launch multiple Grade A+ commercial projects. The total stock at BKC stands at about 18 Mn sqft as on year-end 2020. Diamond Bourses (~2 Mn sqft) opened its doors in year 2010. As of today, some of these Grade A+ commercial projects command the highest rent in the country for office space.

BKC currently houses some of the biggest Indian and International businesses including Amazon, Netflix, GIA, Bank of America, GIC, Google, Novartis, Pfizer, Wework, Kotak Bank, National Stock Exchange, SEBI, ONGC etc. These occupiers employ more than 200,000 people who commute to BKC daily, fuelling the growth of social infrastructure such as restaurants, gymkhanas, schools, hotels, luxury housing projects etc. Reliance shall move its headquarters to Jio World Centre, a 7Mn sqft convention centre which is expected to house office spaces, luxury mall, hotels, a performing theatre, convention centre etc.

One of the most well-connected suburbs of Mumbai city, BKC is also the epicentre of most of the major existing and upcoming infrastructure projects – Mumbai Highways, upcoming Metro lines, upcoming Bullet train project, SCLR, Bandra-Worli Sealink, upcoming Coastal freeway etc. Such a central location advantage with convenient connectivity to Northern suburbs, South Mumbai and Eastern Suburbs gives Bandra a big edge over any other micro-market. BKC is also surrounded by prime residential localities such as Bandra West, Khar West, Santacruz West on the West and Chembur, Wadala and Vikhroli on the East. Existing physical Infrastructure makes it easier for residents in these localities to easily commute to BKC. Nearly 85% of all senior employees at BKC reside in these neighbouring suburbs.

We foresee further development in and around Bandra Kurla Complex not only for office complexes but for retail malls, cinemas and hotels over the next 5-7 years. Around 4-5 Mn sqft more Grade A+ commercial office projects are planned which will generate about 50,000 new jobs in BKC over the next 5-7 years. Till then, we can comfortably shelve the case file of ‘CBD of Mumbai’ with a seal of BKC on it.

For more CRE industry insights and data research do contact us

L&T Seawoods rents out 52,391 sqft to Fleet Management for record rent of Rs 95 per sqft per month in August 2017…

Fleet Management has taken 52,391 sqft built-up area in L&T Seawoods Grand Central, Navi Mumbai in first week of August 2017. Fleet Management will be paying Rs95 per sqft per month at an annual pay-out of Rs 6 crore to the landlord, L&T Seawoods for 5 year lease term. The lock-in period for tenant is 3 years while the landlord is locked in for the entire 5 year lease term. Additionally, tenant has to pay 8 months security deposit with additional tranche of security deposit at time of rental escalation after 36 months to match the prevailing rental. Tenant will be facing escalation of 15% after 36 months. Tenant gets 34 parking lots which would be approx. 1 car park per 1500 sqft.

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Watson Pharma leases 1.05 lakhs sqft in L & T Seawoods Grand Central, Navi Mumbai at record rent of Rs 95 per sqft per month. Fleet Management also leased 52,391 sqft in same building at 95 Rs per sqft per month in Aug 2017

Watson Pharma has leased 1,05,397 sqft built-up area in L & T Seawoods Grand Central, Tower 2, Navi Mumbai in first week of September 2017. Watson Pharma will be paying Rs 95 per sqft per month at an annual pay-out of Rs 12 crore to the landlord, L & T Seawoods for 10-year lease term. The tenant has negotiated 6-month rent free period for fit-outs. The lock-in period for tenant is 5 years while the landlord is locked in for the entire lease term. Additionally, tenant has to pay 6 months security deposit with additional tranches of security deposits at time of rental escalations to match the prevailing rental. Tenant will be facing escalation of 18.7% after 36 months. Further, Watson Pharma’s parent Teva is expected to rent an additional space of around 28,000 sqft built-up area in the same tower.

Featured in: Business Standard

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Office market opens up to Toddlers!

Crèches / Day-care Centres open up across all major commercial centres in Mumbai…

As per the Maternity Benefits (Amendment) Act, 2017, every commercial office establishment having fifty or more employees shall be mandated to have a crèche facility / Day-care centre within such distance as may be prescribed, either separately or along with common facilities. Further notifications on distance, location etc. of such day care centres are expected soon.

Featured in: Business Standard

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Co-Working spaces on the rise in BKC, Mumbai.

After Wework, Quest Office, Awfis leases 24k sqft in BKC at MG or 42% revenue share.

Awfis, a co-working office space provider leased 23,648 sqft in Crescenzo, a commercial office building in Bandra Kurla Complex in 1 st week of August 2017. Awfis will be paying higher of minimum guaranteed initial rent of Rs 125 per sqft per month or 42% revenue share to the landlord DKJ Shelters. IDFC was the previous occupant at the said premises. Awfis negotiated 3 months’ rent-free period in the 60 months lease term to complete fit-outs in the leased premises at its own expense. The lease rent will increase by 9.6% to Rs 137 per sqft per month after 1 year. Additionally, the tenant has to pay common area maintenance charges which are currently estimated at Rs 10 per sqft.

Featured in: Business Standard

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Commercial Office market continues to remain an “Occupier Market” as occupiers renegotiate rentals downwards. Deutsche Bank generates Annual Savings of INR 5 crore in rentals by renegotiating its current lease downwards in BKC…

Deutsche Bank’s CRE team has renegotiated its lease rental for its corporate front office of 90,000 sqft at a premium grade A commercial building in Bandra-Kurla Complex (BKC) by 15% from INR 306 per sqft per month to INR 265 per sqft per month. Deutsche Bank executed an addendum agreement on March 31, 2017. Deutsche Bank’s previous agreement commenced in year 2012 at initial rent of INR 278 per sqft per month with lock-in period until March 2018. The current rental was INR 306 per sqft (post its first escalation of 10%). Although the contracted rental has been reduced by 15%, the lock-in period has been extended until March 2022 from the existing lock-in period until March 2018 benefiting for the Landlord in terms of assured tenancy by Grade A occupier.

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