Guide for Puducherry Commercial Real Estate Investment

Puducherry, formerly known as Pondicherry, is the name of one of India’s Union Territories and its capital city. It is also called the ‘French Riviera of the East’ as it was one of the last colonies of France in India. Its French lifestyle and architecture make it a popular tourist destination.  

Apart from its massive tourism industry, agriculture is the main economic activity of the residents of Puducherry, with over 40% of the population dependent on it. Other major sectors include fisheries, dairy farming and various manufacturing industries. 

The major manufacturing industries are pharmaceuticals, textiles, consumer durables, automobile spare parts, FMCGs, etc. Altogether, there are around 5090 industries in Puducherry of different sizes, which attract people from nearby places.

Puducherry has a well-developed social and industrial infrastructure with good connectivity to nearby cities and states. It has a domestic airport connecting it to Bengaluru and Hyderabad. Its closest railway station is in Villupuram, 35 km from the city. 

Due to the above reasons, Puducherry is a popular spot for investment in real estate as it offers good aspects of return on investment. Therefore, you should read ahead if you want to buy a commercial real estate property in Puducherry.

Top Reasons to Invest in Puducherry Real Estate

Given below are the major reasons to invest in real estate in Puducherry:

• Education Hub

Puducherry has always been one step ahead in education due to the colonial influence over the city. It has some of the best educational institutions in the country, like Sri Aurobindo International Centre of Education, Pondicherry University and Mother Theresa Institute of Health Sciences. This ensures the availability of skilled candidates for businesses in this city, which drives the demand for commercial real estate here.  

• Tourism

Puducherry is one of the most popular global tourist destinations. Due to its colonial history, a major part of this city is still organised with French architecture and monuments. The vibe of this city itself has a separate French-like ambience, which attracts tourists regularly.

Puducherry is also famous for its coastal geography and places like the Shri Aurobindo Ashram and Auroville. Hence, it is a profitable sector for commercial real estate investments in hotels, restaurants and tourist-focused businesses.

• Cost of Living

Despite being a tourism-driven city, Puducherry is a very affordable place to live in. Therefore, many people choose to open a business here instead of in southern metro cities like Chennai as the cost of set up is comparatively lower. Hence, it is a good choice for investing in commercial real estate.

• Passive Income

Buying a commercial property in Puducherry will provide you with a regular source of passive income and will also grow your capital at the same time.

Commercial Real Estate Investment Opportunities in Puducherry

Before buying a commercial property in Puducherry, you should look into these locations for suitable properties:

• Auroville

It is an experimental town currently being developed jointly by the Government of India and UNESCO. This was a visionary town established to highlight the unity of people aimed to build a residence for all people of earth undivided by borders. It is currently one of the most developed areas and the best for commercial investment. 

The price range for real estate investment in this area varies between ₹15 lakh to  ₹60 lakh, and prime properties can go upto ₹1crore.

• White Town

This area in the city is famous for its retention of French infrastructure and lifestyle. This part of Puducherry is different from the rest of India and is a trendy tourist spot. White Town is connected via Puducherry Railway station with the rest of Puducherry.

Thus it is a good option for commercial real estate investments. The average investment in this locality is approximately ₹42 lakh.

• Villianur

Villianur in Puducherry is an education hub and one of the best places for investing in commercial real estate. Popular colleges like Christ College of Engineering are a population magnet for this locality. The average cost for a property in this locality is ₹50 lakh.

Also Read: Guide for Raipur Commercial Real Estate Investment

Things to Consider before Buying a Commercial Property in Puducherry

Consider the points mentioned below before you invest in a commercial property in Puducherry:

• Property Valuation

Invest in a property that has a reasonable valuation as per the features it offers you. The more reasonable is your property valuation, the better margin you will gain in the future from your investment.

• Connectivity

Your property should be located in a well-connected area. People prefer easy accessibility for customers and clients for their businesses. Check if your property has access to well-maintained highways and frequent public transport like buses and trains.

• Builder

Your property builder should be an established, reputable professional with a good track record. This ensures the good quality of your property and the retention of its value.

• Location

If you buy a property in an underdeveloped area, you will fetch exceptionally high returns when the area develops and valuation multiplies. However, it is important to check if there are development projects taking place in such a location before investing.

• Lease Agreement

Before finalising your contract, you should verify all details in your lease agreement and ensure it suits your investment objectives. You can take the help of an attorney to understand the terms and conditions.

• RERA Verification

Real Estate Regulatory Authority (RERA) is a state body to govern real estate activities. It was formed by the Real Estate Regulatory Authority Act 2016 under the Indian Constitution. Before investing in a property, ensure to verify all details, including the builder’s history, from the official website of RERA Puducherry.

Stamp Duty in Puducherry

The stamp duty charges applicable in Puducherry to buy commercial property are given below.

Registration Charges in Puducherry

The table below contains the registration charges for Puducherry’s real estate purchases.

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

Puducherry is a popular destination for real estate investors due to its massive tourism industry and developing economy. It is one of the cities selected under the smart cities mission in India. Under this project, Boulevard and surrounding areas are being developed with a focus on major sectors like tourism, water management, energy, etc. 

Several proposed projects are underway to enhance and improve tourism, water supply management, sewage management and other sectors with a budget of above ₹800 crore. These developments will build the infrastructure and connectivity of this city exceptionally.

The local government also aims to provide an opportunity for the IT sector in this city and provide skills and resources along with a boost to its existing education sector. Parallel to these developments, Puducherry is expected to see a rising demand for real estate in the city.

Commercial Real Estate vs Other Asset Classes

Different asset classes provide different rates of returns and risk levels to investors. To understand which asset is a good investment, refer to the comparison given below:

• Commercial Real Estate vs Stocks and Mutual Funds

Commercial real estate investments offer moderately high returns at moderately low risk to investors. Shares and mutual funds offer comparatively much higher returns but carry very high risks. These assets are market dependent and hence highly volatile.

• Commercial Real Estate vs Residential Real estate

Residential real estate offers moderately lower returns than commercial properties but is comparatively safer. On the other hand, commercial real estate offers high returns, but they carry more credit risks.

Discover More: Guide for Puducherry Residential Real Estate Investment

• Commercial Real Estate vs Bonds

Commercial real estate investments offer high returns at low risks but involve high initial capital. On the other hand, bonds offer moderate returns for moderate risks for comparatively lower initial investments. Bonds are good options to diversify your portfolio.

If you want to invest in bonds, you should refer to our list of best-performing bonds. Register to start investing in top-rated bonds.

• Commercial Real Estate vs Gold

Commercial real estate investments offer better returns than gold in the long term. This is because asset value appreciation in commercial real estate is significantly higher than in gold investments, and commercial real estate offers an additional income stream, unlike gold. However, gold investments carry higher liquidity compared to real estate.

The table below compares the above asset classes based on returns, liquidity, risk, volatility and ticket price.

Steps to Invest in Commercial Real Estate in Puducherry

To purchase a commercial property in Puducherry, follow the steps given below.

• Step 1: Fix a budget for your commercial real estate investment.
• Step 2: Do a market survey to understand current real estate trends in Puducherry.
• Step 3: Shortlist properties that fit your budget.
• Step 4: Visit the selected properties with your broker and check all amenities.
• Step 5: Finalise a property based on your requirements.
• Step 6: Conduct a background check of your property from the RERA website.
• Step 7: Provide all required documents for registration.
• Step 8: Complete your payment to the property owner and broker (if any).
• Step 9: Pay the registration and stamp duty charges.

Read More: Guide for Bokaro Commercial Real Estate Investment

Final Word

Puducherry is a safe city with a strong heritage from the French. It is also a holy town in South India with several spiritual architectures. There also is a large influx of tourists to this city on a regular basis, which presents lucrative opportunities for commercial real estate investments. If you want to invest in a commercial property in Puducherry, refer to the points given above before investing.

Frequently Asked Questions