Buying Commercial Property in Delhi: An Overview
The write up below is just an overview of some of things one should keep in mind while considering to buy a commercial space in Delhi.
Like most of the capital cities around the world, due to high capital value of commercial properties, buying commercial property in Delhi is not the most common practice with many businesses favoring rentals. Despite this there are many advantages to investing in your work space.
Commercial property for sale in Delhi can be divided down as:
- Offices – standard offices and business parks
- Retail – shops, showrooms, shopping malls, department stores and supermarkets
- Industrial – industrial estates, warehouses, factory
- Leisure – restaurants, pubs, lounge, hotels, leisure parks
To search our full portfolio of commercial properties for sale please use the search facility on menu under “find a commercial space” heading.
If you wish to buy business premises in Delhi, there are a few more things to bear in mind than with an ordinary residential apartment purchase. This guide to buying commercial property in Delhi should introduce you to most that is involved, from choosing the right kind of property to things to look at documentation and registration.
Whether you are searching for an office, shop or restaurant to buy in Delhi, Open Estates is, one of the leading property agents in Delhi, will have the perfect property for you.
Buying Commercial Property in Delhi – Advantages and Disadvantages
If you are a small or new business without the capital to buy a property, renting may be a more viable option. For larger businesses, those that have formed a professional partnership or, if you own a shop or pub and wish to live above the premises, buying commercial property can have a number of benefits for you.
Advantages to buying your own commercial property:
- Freedom – As the owner of the space, you can make the decisions on how to improve, enhance the space in order to address potential customer requirements
- Peace of mind – No rental increases shocks, and you may be able to adjust your monthly loan payments
- Profit – if the building gains value, you will be the one to profit, also company assets grow
- Sub-let – you may be able to let out part of the property to lessen your loan installments
- Leasing Income – in future, if your business moves, you can let the property to receive another income
- Tax – Interest payments on commercial loans are tax deductible
- Equity: You could take loan against acquired equity in your commercial property over time.
Disadvantages of buying your own commercial property:
- Flexibility of location: With the ever so fast changing economic and technological advances, for companies, there will always be unknown factors. Despite the most thorough research, your business could develop in quite unexpected ways, some of which will be beyond your control.
- Extra Burden: largely true for new or smaller businesses however applies to large established businesses too for a medium term horizon. Renting takes away the pressure of trying to obtain financing until you’re ready and have a considerably long term vision for a particular location.
- Time – making alterations or carrying out building work can take up valuable time
- Responsibility – you will be responsible for the safety of the building, health and safety and fire precautions
- Unexpected Losses/Depreciation: In many cases commercial property losses value after a certain number of year, if the property loses value, it could impact on your business capital.
By and large, buying commercial premises often has a higher overall cost than renting for the first five years, breaks even in the next 5 years or less, and thereafter you start gaining from it. Therefore, anyone looking to buy commercial property should view it as a long-term investment for their business.
Choosing the Right Delhi Commercial Property to Buy
Before you choose a commercial property to buy in Delhi, you should think about which of these premises is most suited to your business, whether this is an office, factory, shop or combination of these. When looking for Delhi commercial property for sale, you may also wish to consider:
- Know what you are looking for: – how much space, quality, budget, business needs, staff demographics, time frame to close the deal etc
- First Impression – what impression the building will give customers and clients
- Budget – whether the property is in your price range
- Productivity – whether the building will be comfortable and productive for your staff to work in
- Legal Requirements – whether the property meets safety and fire requirements. If there is any fire or sealing by local authorities over violation, you will be the one at loss for not being insured.
- Facilities: Parking facilities, accessibility vs charges for parking comparison, and delivery restrictions
- Transport links: Delhi Metro connectivity, expressways, highways, connecting roads, airport
- Charges:Local authority charges and business rates
- Restrictions: Building timings, local authority planning restrictions, and whether they will allow you to use the property as you require
- Neighborhood crime rates
- Amenities for staff and clients in the vicinity, including restaurants and supermarkets
Freehold or Lease hold
Most companies prefer renting, while buying freehold commercial property in Delhi is by and large a great investment, it’s difficult to find one since most of Delhi commercial complexes (LSC’s) were allotted as leasehold properties for 99 years around 1960 and 70’s. Freehold property gives to absolute ownership of the land as well as the built up on it, however land rights are held with government in case of a lease hold property. So, be careful while investing in lease hold properties as property rights and not freely transferable, it is done through POA power of attorney or GPA. Also, it is going to be very hard to find a lender for a lease hold property in case you are looking to finance your investment.
Open Estates can help you to find the right type of property to buy in Delhi. Please feel free to look around on our website, we have a good inventory of commercial properties to buy in Delhi, Gurgaon and other NCR areas.
Choosing the Right Delhi Location to Buy Commercial Property
A good location for your business is vital. When searching for commercial property for sale, make sure it is in a location that best suits your business needs.
Retailers – while it will largely depending on who your potential customer is, you would want to be as close as possible to suppliers as well as your competitors, also some good branding space for visibility would be great. Some of the favored retail destinations of Delhi are, South Extention, Connaught Place, Saket, Khan Market, Pitampura, Kamla Market, Sarojini Nagar, Lajpat Nagar, Nehru Place, Rajouri Garden, Punjabi Bagh. may need to be close to your customers, suppliers and other Delhi retailers. You may also need good visibility, to attract passing trade
Established Businesses: Delhi being the capital city of the country, most established businesses like to have their corporate office or at least a branch office in the city. While there is limited supply of new A grade commercial space with bigger contiguous floor plates, the city does offer many small to medium renowned business centers in all corners of Delhi. Most popular business districts are Bhikaji Cama Place, Nehru Place, Connaught Place, Rajendra Place, Netaji Subhash Place, Moti Nagar, Green Park, Janakpuri, Jhandewalan and lately Jasola and Saket which have modern building.
IT/ITES Communications – IT/ITES companies have disrupted the Delhi NCR commercial real estate market like never before in the recent past. Usually require large modern floor plates for meeting standards of their international clients while keeping the per sq ft cost per employees as low as possible, the best options for such businesses are available outside the main Delhi limit in satellite towns like Gurgaon, Manesar, Noida etc.
Manufactures – may need to look for industrial plots with proper license approved for manufacturing and excellent transport links for shipping goods in and out of the city. Some of the well-known industrial hubs of Delhi and NCR are Okhla, Naraina, Patpatgunj, Bawana, Lawrence road, Moti Nagar, Manesar, Mohan cooperative estate.
Startups – may wish to consider moving to a Lal dora commercial location and co working hubs in central Delhi or south Delhi which potentially offer lower running cost than conventional office space and are also well connected to most parts of Delhi and NCR areas. Connectivity is extremely vital to attract employees as well and customers for an emerging business. With more and more startups mushrooming in the last couple of years, low rental areas like Munirka, Syed ul Ajab, Shahpur jat, Mohmmedpur, back lanes of Connaught place, Daryagunj, Gautam Nagar, Archini, Malviya Nagar, Vasant Kunj etc have become the popular destination for new businesses.
Documents to check while buying a commercial property in Delhi:
New Sale Deed – Latest registered sale deed at the local sub registrar office by the seller.
Chain of following documents:
- Allotment Letter: Given by developer to original allottee against the application form mentioning space number, area in sq mt, booking rate.
- Buyer agreement book – Provide by the developer/builder to original Allottee.
- Original payment receipts: All payment receipts by the developer to first allottee
- Conveyance deed – First sale deed done in the name of allotte by the developer/builde
- Lease deed with tenant – Ensure that the lease is executed between the actual seller and the tenant.
No dues from local municipal authorities regarding taxes
Buying Process Time – Estimate Time Frame: (Average 6 months)
Working out basic Requirement: (Around 10-20 days) Size, layout, expansion forecasting, location, client needs, quality and overall feel of the area, loan amount, down payment available
Initial Analysis: (Around 1 week) Market survey, sales/rental comparable reports, rent vs buy analysis, loan installment calculations
Selecting the right partners: (1week) Property agent/broker, CA, Architect/interior designer
Scouting available options: (Around 3- 10 weeks) Looking around for different options available out there for your business need
Narrow down options: (Around 2 week) make a short list of final 2-4 options, show to space planners for their view
Final financial and space analysis: (Around 2 weeks) take a relook at any layout inefficiencies from a space planning prospective, re visit your cash flow.
Final Selection and negotiation with Seller: (Around 4-12 weeks) Zero in for the best alternative, discuss terms and negotiate price with seller, make counter offers, draft agreement
Close: (Around 4-12 weeks) Take a call on financing, finalize terms and rate with seller, register the deal at local registration office.
Financing Your Commercial Property in Delhi
When you find the right type of property in the right location for your business, unless you have a large amount cash to spare, you may need to get a commercial loan to finance the property’s purchase. Please be aware that to get a commercial mortgage, you will need to commit to a certain minimum loan term, and also generally end up paying more than usual 20% down payment as in case of residential.
As part of your loan application, you will need to arrange for a valuation inspection to be carried out. This inspection will assess the value of the demised property, the property’s condition and investment value. In case the particular financial institution allows one should arrange to have this valuation carried out yourself, rather than rely on the financial institution, as you would be liable for any problems that are overlooked. For more information, feel free to connect with any of the major banks loan division.
Delhi Commercial Property Costs
Buying a property requires a variety of costs, on top of the property purchase. These include:
- Professional Fees – real estate agents commission charges, valuation fee, lawyer and any other professional advisory like architect etc that you may involve. Usually between 1% to 2% of the entire transaction value for agents.
- Stamp Duty: Stamp duty and transfer duty @ 4% if the owner is a woman and @ 6% in case of a male
- Registration Fee: is 1% of the total value of Sale Deed + Rs. 100/- pasting charge.
Documents Required for Registration:
Both Seller and purchaser to be present along with identification documents i.e. Pass Port, Epic Card, Driving License and Pan Card etc. at the time of presentation. Aadhar Card (Mandatory)
Two witnesses along with identification documents (Aadhar Card) need to be present during presentation of documents.
Buying own commercial space in Delhi can be one of the biggest decisions that a business can make, it involves a lot of meticulous planning and fore sight to be able to make up for the worth of money at stake. We at Open Estates understand the Delhi real estate commercial market and have years of experience in helping scores of business find the right office space in Delhi. We are one of the main commercial Delhi real estate agents for regular office space for small – medium businesses to large businesses in the entire Delhi region. In case you have any requirement for commercial space or have a property to lease or sell feel free to connect with us, we will be happy to help.