HNIs prefer commercial properties for higher yield: Colliers

High net worth individuals (HNIs) prefer to invest in the commercial real estate segment against residential properties in India as commercial sector provides 7-8 per cent higher yield, said Sanjay Chatrath, Executive Director (North) at Colliers International India, New Delhi on Tuesday.

Average growth in residential property prices was less than 2 per cent during 2014-18, although the average disposable income with the middle-income group increased during the period. "The HNIs have limited their investments in the residential sector owing to lower returns. Instead they have been actively investing in commercial or retail spaces, that gives them a higher yield of 7-8 per cent," Chatrath said.

A report released by the global real estate investment management company said commercial real estate would be the leader in the realty sector in terms of investment over the next three years.  "Large corporate and institutional investors are feeling confident about investing in India. The overall investment inflow in 2018 in the Indian realty recorded was $6.5 billion, which is a 55 per cent YoY (year-on-year) increase over 2017," the report said. 

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"Some of the institutional funds, including Blackstone, Brookfield, CPPIB, GIC of Singapore, Warburg Pincus and Abu Dhabi Investment Trust, have been investing heavily in India," it said. On the residential market, it said although it took a hit in the past few years, 2019 looks positive for the segment. "With the recent announcements, the segment will witness investors and developers moving towards affordable housing, student housing and co-living," said the report. 

About 40 per cent of all the new launches in 2018 were under the affordable segment. Bengaluru, Chennai, Hyderabad, Kolkata and NCR witnessed maximum launches in the affordable segment that is below Rs 5 million. Mumbai, however, witnessed more launches in the mid-segment, in the range of Rs 5-10 million, it said.