Post COVID, banks have become a less appealing place for investor’s money, thus real estate properties are becoming a favorable option for many.

Investing in real estate has traditionally meant buying a house or a residential unit. The reason for this is that, depending on the market dynamics, the capital investment on a residential unit is quicker. It has been observed that investing in retail real estate has been proven beneficial as it provides higher returns as compared to investing in a house. One of the most popular real estate investment options is retail real estate. It is a good time to start investing in retail spaces. Foreign Direct Investment (FDI) in retail has put India on the global map and has investors thinking about India’s retail real estate market.

Retail Real Estates are investment options wherein investors put their money in retail shops ranging from Malls to Cafes or local restaurants. It is advised to start investing with modest businesses like gas stations, fast food restaurants, or convenience stores if one is new to investing in retail real estate. It is observed that new retail investors invest in fast food stores as they long for a low-risk property that is easy to manage. Retail spaces are very flexible and can be used for different ventures. For example if someone owns a retail tenancy, then that space can be used to set up a restaurant or a general store.

Benefits of Retail real estate investments.

Investing in retail real estate has many benefits, namely:

• Higher ROI: Retail real estate provides around 5%-7% return on investment which is considered a decent rate for investors and a better choice than investing in residential estates.
• Long Leases: When comparing a residential real estate, where the leases generally range from 6 months to a year, to a retail real estate, where the lease ranges from 3-5 years, the latter one seems to be a better choice of investment as it guarantees income for a set duration.
• Smaller Deposits: Retail spaces are typically lower price as compared to average residential property. This means, a small capital outlay will do to invest in such properties. Although, location plays a factor in the capital for investment which shall be discussed further.

Due to strong returns, retail real estate offers long term income security. Financial barriers such as income or capital are lower in retail real estate due to which they are a preferred choice among new and upcoming investors. Small time investors also benefit from these low financial barriers which make investing in retail real estate a good option. Retail real estate has a very diverse set of tenants, ranging from shopping malls to local general stores. This is a plus point for retail space as the investors have a variety of options to choose from.

Some properties are pre-leased which guarantees cash inflow from day 1, thus attracting more and more investors to invest in their desired retail store. Pre-Leased properties have this added benefit of tenant guarantee as the property is already leased, thus more tempting for the investors. Location plays a major factor in determining the prices of the retail real estate. The price will increase if the retail establishment is in a desirable, prime location, but it will also bring in an equivalent amount of income. Finding a location for retail space is not difficult and can be set up anywhere. Thus finding retail real estate to invest in is not much trouble.

The rental trends in the area are something that one should look out for while investing in a retail space. Retail spaces have the minimum chances of idle property. There will always be a tenant that would be occupying the real area, which thus promises steady income for a certain amount of time. Retail spaces are easier to put on rent, and attract long term leases as mentioned, especially if the location is a prime one. Retail real estate is a wise alternative for someone who is considering a long-term investment strategy because it offers strong returns, which boosts the investor’s confidence.