Guide for Coimbatore Commercial Real Estate Investment

Coimbatore is the second largest city in Tamil Nadu and one of its major metropolitan cities. It is a prominent hub for education, healthcare and manufacturing in Tamil Nadu, and is thus, the fastest-growing tier-II city in India. Moreover, it is home to more than 25,000 MSMEs, with the primary industry being textile and IT.

Therefore, with a boom in the industrial sector and employment, the demand for commercial real estate investment in Coimbatore is increasing exponentially.

Let us know more in detail!

Top Reasons to Invest in Commercial Real Estate of Coimbatore

The top reasons to invest in the commercial real estate of Coimbatore are as follows:

1. Job Opportunities

The development of the automobile manufacturing and IT sector is generating ample job opportunities. Moreover, with a good public transportation system and the availability of social amenities, employed individuals want to shift to this location. Hence, all these things are increasing the demand for commercial real estate in Coimbatore.

2. Better Connectivity

Coimbatore is an important station in the Coimbatore Salem Industrial Corridor, connecting different parts of the city through roads, railways and airways. This great connectivity has attracted more than ₹14000 crore of commercial real estate in this city.

Commercial Real Estate Investment Opportunities in Coimbatore

The locations offering the best opportunities for investment in Coimbatore are as follows:

1. Peelamedu

Peelamedu is an engineering hub due to the presence of several IT, ITes and technology parks. It has great connectivity through roads, railways and the red metro line and is also nearest to the airport. Moreover, the Coimbatore Junction is also very near to this place and is easily accessible.

2. Mettupalayam Road

Mettupalayam Road also serves good connectivity to the main parts of the city through roadways and railways. It is on NH 67 and stretches approximately 36 km from Rangai Gownder Street to Mettupalayam’s northern suburb. 

Also Read: Guide for Kanpur Commercial Real Estate Investment

Things to Consider Before Buying a Commercial Property in Coimbatore

The main things to consider before buying a commercial real estate property in Coimbatore are as follows:

1. Proper Market Research 

Investing in commercial real estate involves vast risks and thus needs a substantial amount of research. Proper knowledge of the market will save you from fraudulent activities.

2. RERA Verification

The Real Estate Regulatory Authority (RERA) is a statutory body notified by the RERA Act 2016 that aims to promote transparent transactions between real estate agents and their buyers. Each state has its own RERA authority that verifies the details of the property and its builder. Make sure to visit the portal of RERA Tamil Nadu to verify the details of the commercial property. 

3. Builder’s bio-data

If you are planning to invest in a particular builder’s property, check their past projects and their status. You must check whether there are any ongoing court cases against the builders or the chosen property.

Stamp Duty in Coimbatore

The stamp duty rates for commercial property sales in Coimbatore are in the following table:

Registration Charges in Coimbatore

The list of registration charges in Coimbatore is in the following table:

It is necessary to consider the rates of stamp duty and registration as they will be an important part of your investment amount.

Coimbatore Commercial Real Estate Sector: What’s the Forecast?

Since FY 2018, the real estate market of Coimbatore has been witnessing an increase of over 45%. In FY 2022, the by-pass land value increased by 80%, and the sale conversion rate increased from 60% to 100%. Moreover, with low property value and expansion of infrastructure, demand for real estate will witness constant growth in the years to come. 

However, despite the growth, the demands for larger office spaces are lower. For instance, office spaces of 10000 square feet are of relatively lower demand than smaller spaces in Coimbatore. In addition, due to more shifting of people here for job opportunities, the residential real estate demand is rising gradually.

Commercial Real Estate vs Other Asset Classes

The difference between commercial real estate and other asset classes is as follows:

• Commercial Real Estate vs Stocks and Mutual Funds

Commercial real estate offers guaranteed returns and direct asset ownership in comparison to stocks and mutual funds. Moreover, stock markets have comparatively higher returns but witness significant fluctuation and higher risks. 

• Commercial Real Estate vs Gold

Gold is an exchanged commodity whose price fluctuates based on global markets. However, real estate is a stable investment option that generates passive rental income. 

• Commercial Real Estate vs Residential Real estate

The vacancy risks in residential properties are higher than in a commercial estate with frequent tenant turnover. Moreover, it needs to be leased on an annual basis, but office spaces can be leased for longer tenures. 

Discover More: Guide for Coimbatore Residential Real Estate Investment

• Commercial Real Estate vs Bonds

Bonds have a low credit risk than commercial real estate properties. Additionally, commercial property investments are less liquid than bonds due to higher transaction costs and the longer time taken to find a suitable buyer for the property.

A tabular representation to compare the assets based on returns, liquidity, risk, volatility and ticket price is as follows:

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Steps to Invest in Commercial Real Estate in Coimbatore

The steps to invest in commercial real estate in Coimbatore are as follows:

Step 1: Conduct proper market research and calculate your investment budget.

Step 2: Shortlist a few affordable sites. You can also take the help of an agent to get the best deals.

Step 3: Plan a field visit to examine each place precisely.

Step 4: Finalise a suitable commercial property and prepare all the official documents like the sale deed, building plan, etc.

Step 5: Make the final payment and purchase the commercial property.

Step 6: Complete stamp duty and registration formalities to transfer the ownership of the property to your name. 

Step 7: Lastly, consider purchasing an insurance plan to protect yourself financially in case your property incurs any damage. 

Read More: Guide for Varanasi Commercial Real Estate Investment

Final Word

The outlook of Coimbatore for commercial real estate is quite promising due to its connectivity and location. Moreover, it is in close proximity to many important residential and industrial places, making it easily accessible for office-goers. If you plan to invest here, conduct thorough market research or consult a real estate agent.

Frequently Asked Questions