Why Single-Owned Commercial Assets Trump Strata Properties in India's Key Cities
Investors in India's commercial real estate market are increasingly preferring single-owned and managed properties over strata-owned ones, and the numbers prove it.
Commercial Real EstateSingle Owned PropertiesStrata PropertiesIndiaRental YieldsReal Estate NewsJun 16, 2024
For instance, in Pune's South West region, single-owned properties showed an 18% higher rental yield compared with strata properties, while in Chennai's Southern Suburbs II, the difference was 32%, according to data from CRE Matrix. This stark difference in rental yields is a major indicator of the advantages of single-owned commercial properties.
Experts argue that single-owned properties offer higher returns, operational efficiency, and greater attractiveness to tenants. Grade A commercial assets, managed through proactive asset management, attract top tenants who are willing to pay a premium for quality office assets. Single ownership allows for centralised management, which facilitates quicker decision-making and more effective property maintenance.
Furthermore, single-owned properties are relatively younger in age, with institutional investment in real estate starting around 20 years ago. At a Pan India level, single-owned buildings are 20% younger than strata-owned buildings, and this difference gets even bigger in micro-markets where the delta in rentals is even higher.
The overall quality of a single-owned building is better perceived than a strata-owned building, as the developer has built it and maintains it to last longer for their own perpetual revenue stream. This streamlined approach ensures that properties are well-maintained and can quickly adapt to market demands or tenant needs.
In contrast, strata properties often face management challenges due to multiple owners, leading to delays in maintenance and decision-making processes. Occupiers are increasingly leaning towards single-owned properties due to the consistent and reliable building management they offer. Single ownership ensures that the property is managed with a unified vision, which translates to better maintenance and faster resolution of issues.
This reliability enhances tenant satisfaction, making single-owned properties more appealing to high-quality tenants and ensuring higher occupancy rates. Single-owned properties tend to maintain and even increase in value more effectively than strata properties, attributed to the cohesive management and unified strategy for property improvements.
Investors are also recognising the benefits of single-owned properties, including higher returns and better value retention. The operational efficiency and higher tenant satisfaction associated with single ownership make these properties a more attractive investment. Occupiers, on the other hand, prefer the reliability and consistency of single-owned properties, which translates to a better overall experience.
Frequently Asked Questions
What is the primary advantage of single-owned commercial properties?
Higher returns, operational efficiency, and greater attractiveness to tenants.
How much higher are the rental yields of single-owned properties compared to strata properties?
Up to 32% in key regions such as Mumbai, Bengaluru, Pune, Gurgaon, and Chennai.
Why do tenants prefer single-owned properties?
Consistent and reliable building management, better maintenance, and faster resolution of issues.
What is the benefit of single ownership in terms of property value?
Single-owned properties tend to maintain and even increase in value more effectively than strata properties.
Why are investors increasingly preferring single-owned properties?
Higher returns, better value retention, and operational efficiency associated with single ownership.
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