Mumbai's commercial real estate market is seeing a significant shift towards single-owned and managed properties, driven by higher returns, operational efficiency, and greater tenant satisfaction. Data from CRE Matrix highlights that single-owned assets in key Indian markets like Mumbai, Pune, Bengaluru, and Chennai offer rental yield advantages of up to 32% over strata properties. For instance, Pune's South West region shows an 18% higher rental yield for single-owned properties, with Chennai's Southern Suburbs seeing a 32% advantage. Experts emphasize the benefits of proactive management and tenant experience in single-owned properties, predicting continued investor preference for this model.
Mumbai's commercial real estate market is witnessing a significant shift in investor preferences. Single-owned and managed properties, as opposed to buildings with multiple owners (strata properties), are gaining significant traction. This trend is driven by several factors, including higher returns, operational efficiency, and greater tenant satisfaction.
Rental yields, a key metric used to measure investment performance, show a clear advantage for single-owned properties. Data from CRE Matrix reveals that single-owned assets in key Indian markets like Mumbai, Pune, Bengaluru, and Chennai offer rental yield advantages of up to 32% compared to their strata counterparts. For example, in Pune's South West region, single-owned properties enjoy an 18% higher rental yield compared to strata properties, while the difference reaches 32% in Chennai's Southern Suburbs Il. This data highlights the significant financial benefit associated with single ownership.
Experts attribute this trend to several factors. Vinod Rohira, Managing Director and CEO of commercial real estate for K Raheja Corp, notes that single-owned buildings, when managed with a proactive approach, attract premium tenants who are willing to pay more for quality office assets. He highlights the importance of consistent upkeep, responsiveness to evolving customer needs, and a focus on tenant experience. Single ownership allows for a unified vision and faster decision-making, ensuring a better overall experience for tenants.
One key advantage of single ownership is operational efficiency. Centralized management allows for quicker decision-making on maintenance and repairs, leading to a well-maintained property. Abhishek Kiran Gupta, CEO & Co-founder of CRE Matrix, notes that single-owned buildings are generally newer, averaging 20% younger than strata-owned buildings across India. This is because institutional investment in real estate began around 20 years ago, and these newer buildings benefit from long-term investment by the owner. Gupta further emphasizes that the overall quality of a single-owned building is often perceived as better than a strata-owned building. The developer has built it and maintains it to last longer, ensuring a more attractive property for tenants.
Reliable building management with a single owner fosters tenant satisfaction. Issues are addressed promptly, and the property is maintained to a high standard. This translates to higher occupancy rates and a more stable investment for the owner. Additionally, single ownership allows for a unified strategy for property improvements, leading to better value retention over time. A cohesive management plan and consistent approach to upgrades ensure the property's market value remains competitive.
The combination of higher returns (up to 32% higher rental yields), operational efficiency, and tenant satisfaction makes single-owned properties a win-win for investors and occupiers in Mumbai. Investors benefit from a more attractive investment proposition with a stable return, while tenants enjoy a well-maintained space that supports their business needs and fosters a positive work environment.
The growing preference for single-owned commercial properties is expected to continue in Mumbai. Investors seeking stable returns and a well-managed property will likely favour this model. Developers, understanding this shift, may adapt their strategies to cater to this growing demand by focusing on single-owned developments with proactive management plans and a commitment to building quality, long-lasting commercial spaces.
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