Right Time to Invest in Industrial property is Now
As an investor, you should know that this is the right time to buy property such as an industrial gala for sale. However, there are a few steps that you need to take in this context. First, consider buying assets that are lower than the replacement cost. The replacement cost is the cost at which the original owner bought the land and built the property from scratch. This implies that the rents on that property would never go down by a significant margin. This is because in these cases you would need to spend more money to develop the new property at the spot.
Leases with longer lock-ins
When you are looking for an industrial property for sale in Mumbai and not getting suitable options, this is something that you can try too. Look for properties where you get leases that have a longer lock-in period. The previous tenants of those properties should have spent on fit-outs. This would make them sticky and the tenants would also vacate such properties as the last option.
Go for leases with yearly escalations of 5%
When you sign a lease, agreements try going for a yearly escalation rate of 5%. Do not go for a rate of 15% over 3 years.
This would make sure the tenants consider the increase to be a gradual one. This is something that you must keep in mind when you buy industrial galas in Bhiwandi.
Using no or little leverage in buying assets with short lock-ins
When you are buying assets that do not have a longer lock-in you should try to use no or negligible leverage. This will make sure that you can match the extent of risk that you have with cash flows in such properties. Your principal and interest payments would come in handy in this context.
Looking for Grade A multinational tenants
When you are looking for an industrial property for sale in Mumbai, look for Grade A multinational tenants. They should ideally be ones for whom rental expenses comprise only a meagre part of the aggregate revenues. This will make sure that they never perceive these assets as cost centers.
Buying only completed assets
When you are looking to buy industrial assets, try going for the completed ones. This will ensure that you can completely deal with all the risks you have with developing and leasing properties. You do not want to deal with rogue developers or look for new tenants in these cases.
How has Coronavirus affected the real estate sector in India?
The asset class in the real estate sector that COVID 19 has hit the hardest is the hotels. This is however rather obvious when you come to think of it. All around the world stocks of hotels have fallen in price. This is because investors have assumed that the room and occupancy rates in the industry would fall. So, if you are looking for an industrial property for sale in Mumbai, this is one area you can look into.
Effect of COVID 19 on retail malls
The next name on this list is the retail malls. Governments shut down the malls first, even as they wanted to restrict the huge gatherings common in these establishments. Experts expect that the retailers would feel the brunt of this economic downturn the hardest, and they would also have to negotiate with their landlords so they can keep the rents at manageable levels during this period. So this is also a great option for an industrial property for sale in Mumbai. Even when the situation becomes normal, they may have to ask their landlords to relax the rents for a few months so they can get back up.