Real Estate Investing: Residential vs. Commercial Properties

Navi Mumbai is a prime real estate destination for investors. The excellent infrastructure and connectivity to Mumbai make Navi Mumbai a prime location. The prices of Navi Mumbai properties are comparatively lower compared to many regions of central and south Mumbai. The demand for both commercial and residential properties is on the rise with the rising economy. Navi Mumbai is also a better location compared to Mumbai because of the cost factor. To make the most of this opportunity many investors may be confused about investing in commercial or residential real estate.

Let us compare both to get a clear picture:

1. Residential

The quantum of investment in residential property is less compared to commercial property. Investing in residential properties is more lucrative as the demand for housing is higher than the demand for commercial properties. Getting a tenant for a residential property is easier than that of commercial property. It is easier to navigate the residential property market as it is more prevalent than commercial. The yearly upsurge in residential rentals makes them more attractive in the sense one can get more for the time and money invested. They have a stable and consistent demand.

Properties in residential projects in Navi Mumbai require less maintenance and upkeep compared to commercial real estate. The property tax on residential properties is less than on commercial which means more return on investment. On the other hand, the rental returns on residential properties are less compared to commercial properties. Also, the tenant turnover is not stable and this may affect the cash flow.

2. Commercial

Commercial properties command higher rents than residential properties. They are popular among local buyers as well as NRIs. The long-term leases on commercial properties make them comparatively stable compared to residential properties. Businesses do not tend to change addresses frequently due to which the rentals remain stable and continuous. The demand for commercial rental has improved with the economic growth across cities.

At the same time if a tenant decides to vacate, finding a new tenant takes longer time. Commercial property rentals are highly sensitive to economic conditions in the market. In times of crisis, renting commercial properties becomes very difficult. We have noticed how the pandemic affected commercial rentals and many properties were lying vacant. With the trend of working from home gaining popularity, renting out offices may pose a challenge, especially for those that command a high rent in the busiest business districts.

These are some of the pros and cons of investing in residential and commercial properties. Investors should do proper research to find out about the returns they will earn before deciding to invest.

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