MUMBAI: Investors in India’s commercial real estate market are increasingly preferring single-owned and managed properties over strata-owned ones as they offer higher returns, operational efficiency, and greater attractiveness, according to experts.
The rental yields for commercial assets across key property markets have been a major indicator that clearly shows that single-owned commercial properties are outperforming their strata counterparts that have multiple owners and operators.
These assets in pockets of key regions such as Mumbai, Bengaluru, Pune, Gurgaon, and Chennai have demonstrated rental yield advantages of up to 32%. For example, 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%, showed data from CRE Matrix.
“Grade A commercial assets, managed through proactive asset management, attract top tenants. Strata buildings do not demonstrate the energy, upkeep, or connect with customers, which is necessary in a business landscape that sees constantly evolving consumer behaviour,” said Vinod Rohira, MD & CEO, commercial real estate, K Raheja Corp. “This distinction ensures that single-owned assets attract top-tier occupiers, who prioritise reliability in services, utilities and overall experience, safeguarding their business operations and talent retention efforts.”
According to him, tenants are willing to pay a premium for quality office assets, an achievement realised only by single-owned asset managers.
One of the critical advantages of single-owned properties is operational efficiency. Single ownership allows for centralised management, which facilitates quicker decision-making and more effective property maintenance.
“Single owned buildings are relatively younger in age as institutional investment in real estate started 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 when we see those micro-markets where the delta in rentals is even higher,” said Abhishek Kiran Gupta, CEO & Co-founder, CRE Matrix.
According to him, 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 his own perpetual revenue stream.
This streamlined approach, according to experts, 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. This value retention is attributed to the cohesive management and unified strategy for property improvements.
A single-owner can implement upgrades and market the property with a clear and consistent strategy, directly impacting the property’s market value positively. 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.
