Real estate trends in the past couple of years point to an increased interest in investing into pre-rented properties. In 2017 alone, more than 10 million sq. ft. of real estate in the NCR were sold, in which pre-leased property for sale in Gurgaon had the most takers. While the phenomenon is significant in the case of commercial real estate, pre-rented residential properties are also beginning to find takers.
The major reasons that make pre-leased residential such a compelling investment option is the low amount of risk, the high rate of returns and healthy capital appreciation with such investments. Industry experts monitoring the trend have suggested that the buyer’s objective is to earn a handsome rental income over short to medium term, and then exit with a moderate to high capital appreciation. The following are the key benefits of investing in a pre-rented property:
1. Assure Returns: Purchasing a pre-leased residential property implies that the new owner automatically inherits the rentals and tenants from the previous owner. Meaning, fixed rental returns right from day one, without any waiting period for finding a suitable tenant for the property. 2. Capital Appreciation: A pre-leased property has a high chance of capital appreciation over a period of time. Naturally, this makes it a lucrative option from the perspective of return on investment. On top of this, the properties located close to the city or in proximity to a commercial or business district are bound to fetch a premium price. 3. Low risk: One of the safest bets in real estate, a pre-leased property is considered to be a very safe investment. The low risk guarantees returns for the buyer, as the property is rented for a specific duration of time. According to industry estimates, the average yield for a pre-leased residential property ranges between 3 and 5 per cent. Furthermore, there is very little chance of a tenant vacating the property before the expiry of the mentioned duration in the agreement. 4. Expectation of higher rent: The returns from a pre-leased residential property are bound to increase with the passage of time. Even if the existing tenant vacates the property at the end of the period of lease, there is a high probability of fetching a higher rent for the property.
All in all, the rising demand in pre-leased residential property coupled with the recent regulatory changes by the government is surely boost the demand even further. Higher transparency would further boost the commercial space demand and therefore be making pre-leases a compelling investment choice.