Commercial Real Estate Investment in Kozhikode

Kozhikode is the 2^nd largest metropolitan area in Kerala and the 19^th largest in India. This port city is one of the oldest in the state and also an important commercial hub. This city is also known as Calicut in English.

Kozhikode is a commercially strong city with flourishing fishery, cyber, agriculture, dairy and several other industries. Kozhikode is a prime location in Kerala for IT development and has more than 4 Cyber Parks that have developed from approximately 10 companies to 100s today. Tourism is also popular here, with places like Kadalundi Bird Sanctuary, Srikanteshwara Temple and Beypore Beach attracting thousands of tourists.

The need for warehouse and storage facilities is always high in this city as it has an active port. Hence, there are plenty of opportunities for commercial real estate owners in Kozhikode. You can earn a decent income by renting out commercial properties here.

To learn more about whether you should invest in commercial real estate in Kozhikode and how you should proceed, go through the below guide:

Top Reasons to Invest in Kozhikode Real Estate

Kozhikode is one of the most commercially advanced cities in Kerala. It is well known for its several industries and ports. Refer to the factors given below to understand the commercial potential of Kozhikode and why you should invest in a commercial property in this city.

• Fisheries Hub

Kozhikode has one of the oldest fishery industries in Kerala. The fishery is one of the primary occupations and a major economic contributor to this city. Around 42 villages consisting of more than 1 lakh men and women earn their living through different business activities in the fisheries industry. Demands for commercial properties are very high in this city due to this large-scale industry.

• Cyber and IT industry

Kozhikode has a thriving cyber and IT industry and is expected to become the next big IT investment zone in Southern India, next to tier 1 cities like Bangalore. It has a proactive IT sector with multiple cyber parks set up since 2014-15. The UL Cyber Park in Kozhikode has reported a ₹37.66 crore export value for the year 2020-21 which is expected to grow higher in the coming years.

• Commercial Hub

Kozhikode has several other active industries besides IT and fisheries. It has a decent agricultural yield and is a popular industry for milk by-products like butter, ghee, etc. Demand for warehouses, office spaces and rental residential spaces remains high in this city.

• Passive Income

This city has a good market for passive income. Therefore, you can expand your wealth with a stable secondary income stream by renting out your commercial property in Kozhikode.

Commercial Real Estate Investment Opportunities in Kozhikode  

You can look into the localities mentioned below to buy a commercial property in Kozhikode.

• Eranhipalam

This locality is a good option for commercial real estate as it is the epicentre of the automobile market in Kozhikode. Other than proximity to other business areas and ports in the city, this locality offers the automobile market exposure to your property. ₹2,539 per square foot is the average cost of commercial properties in this locality.

• Thondayad

It is a junction area that connects Kozhikode to the eastern part of the district and the rest of Kerala. This area is exposed to a wide population that enters and exits the city daily. Thus, it is one of the prime areas for investing in commercial real estate. The average cost of commercial property in Thondayad junction is around ₹1,180 per square foot.

Things to Consider before Buying a Commercial Property in Kozhikode

If you want to invest in a commercial property in Kozhikode, you should carefully consider the list of factors mentioned below before your investment. Real estate assets require a large capital for investment and thus you should always consider all possible factors before finalising your investment.

• Lease Contract

One of the important documents that affect your commercial real estate investment is a lease contract. This document is drafted as an agreement between the two involved parties and it includes all applicable clauses that need to be executed by the buyer. Thus, you should be clear about your lease before sealing the contract.

• Property Developer’s Credibility

Make sure that you buy a property which is constructed by a reputed and successful builder in your city. The credibility of the builder directly or indirectly affects the current and future valuation of your property. Properties developed by experienced builders have more demand and thus, they will also have high resale value.

• Connectivity

This is one of the most significant factors to consider for a commercial real estate property. The connectivity of a property to the important areas of the city and the transportation options available around the locality drives its demand among businesses. Hence, you should always check the connectivity and location of your property.

• Infrastructure and Amenities

The amenities and infrastructure that support a given property are other major factors that affect its demand. The presence of modern facilities and proximity to important services like hospitals, schools and colleges are a must-have for good commercial properties.

• RERA Verification

Your selected property in Kozhikode should be registered and its details updated on the official website of RERA Kerala. This is a compulsory requirement as per the Real Estate Regulatory Authority (RERA) body which is present in all states under the Real Estate Regulatory Authority Act, 2016. 

RERA is responsible for monitoring the real estate activities and participants in a state and safeguarding the interest of the investors. Thus, you should always check the website before you confirm your choice.

Stamp Duty in Kozhikode

You should be aware of the stamp duty charges applicable to real estate in Kozhikode. Refer to the list given below.

Registration Charges in Kozhikode

Refer to the table below to learn about the registration charges in Kozhikode.

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

The commercial real estate industry in Kozhikode has flourished exceptionally in recent years. There has been a boom in the real estate sector as many buildings and malls have developed here.

Kozhikode City has been declared a Special Economic Zone (SEZ) due to its vast variety of industries and potential to generate significant economic growth for the entire state. Under the SEZ objective, this city will expand its cyber parks and capacity to hold IT companies. Presently, this city accommodates more than 1,000 IT-related companies in its cyber parks. 

In addition, the jobs generated through the commercial sector in this city will boost demand for rental accommodations as well. Along with these aspects, the city is also expected to have several malls and other entertainment zones which will develop the real estate market further in the city.

Commercial Real Estate vs Other Asset Classes

Investors prefer investing in multiple asset classes to diversify their portfolios and balance the scope of risks. Other than commercial real estate, there are several other asset classes with different returns, risks and liquidity. 

Here are the points on how they compare to commercial real estate.

• Commercial Real Estate vs Bonds

Bonds offer moderate returns for low to moderate levels of risk. These are fixed-income securities offered by companies and are good options for investors looking to park their excess funds for the medium term. 

On the other hand commercial real estate offers high variable returns for moderate risks but has longer investment tenure. If you want to invest in performing bonds you can check the list of bonds given on our homepage.

• Commercial Real Estate vs Stocks and Mutual Funds

Stocks and mutual funds are highly volatile assets which offer high returns to investors based on market activity. The ticket price for stocks and funds are comparatively lower and they also offer the opportunity to diversify your portfolio by investing in different sectors.

Commercial real estate properties on the other hand offer high returns with moderately low-risk factors. However, due to a high ticket size, the scope for diversification is unlikely for this asset class.

• Commercial Real Estate vs Residential Real estate

Residential real estate offers comparatively lower returns than commercial real estate but they are also comparatively safer. Commercial real estate offers high returns and has much more demand than residential real estate. Commercial properties typically cost more than their residential counterparts.

• Commercial Real Estate vs Gold

Gold investments are relatively safe assets though they carry some volatility. However, the degree of return is comparatively low with context to a longer investment period. The return from this asset class depends on the appreciation value of the precious metal based on market demand. 

Commercial real estate on the other hand offers high returns and scope for additional income through rental yield and other opportunities.

A point-to-point comparison of the above assets based on returns, liquidity, risk, volatility and ticket price is given below.

Steps to Invest in Commercial Real Estate in Kozhikode

Follow the list of steps given below to invest in a commercial property in Kozhikode.

Step 1: Finalise a budget for your investment in real estate.

Step 2: Select a reliable broker to help you choose a good property. An experienced broker will have valuable sources which will help you select a property that will be a positive investment for you.

Step 3: Thoroughly research all the recent real estate market trends and price factors in Kozhikode.

Step 4: Visit the properties suggested by your broker and check their amenities and other factors as mentioned above. Once you have seen several properties, shortlist a few properties as per your preference.

Step 5: After you verify all details from the RERA website, finalise a property for your commercial real estate investment.

Step 6: Now complete all formalities and submit the required documents.

Step 7: Make your payment and pay your broker’s commission.

Step 8: Complete the registration process and pay all additional charges.

Step 9: Get insurance to protect your property from financial threats.

Final Word

The commercial real estate market in Kozhikode is at its prime as the active industries here are growing rapidly and generating economic benefits. As a result, the demand for all types of real estate is high here. 

As more people come to this city due to its employment opportunities, there will be an increase in demand for commercial spaces for businesses. Therefore, you can get good returns by investing in commercial properties in Kozhikode.

Frequently Asked Questions