Guide for Varanasi Commercial Real Estate Investment

Varanasi is a heritage city of Northern India, located on the Ganges River in Uttar Pradesh. The textile and tourism industry in this city is the most popular, and its gradual development creates employment opportunities for the locals. Moreover, the city is well-connected by road, rail and air, providing access to other important areas. 

More than 3,60,000 passengers and 240 trains pass through Varanasi daily, playing an important role in its connectivity. Hence, the demand for commercial real estate in Varanasi is increasing with developing connectivity and infrastructure.

Let us know more about it in detail!

Top Reasons to Invest in Commercial Real Estate in Varanasi

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

1. Better Connectivity

Varanasi is a well-connected city through road, rails and air, providing accessibility to many important areas of the city. It directly connects some of the important highways like NH 19, 223, 35, 31 and 7. Moreover, it also has an inland port, covering almost 34 hectares and approximately 1.26 million metric tons of cargo annually.

2. Infrastructural Development

The infrastructure of Varanasi is witnessing gradual development both in public and civic administration. Parts of Varanasi that are contaminated with industrial chemicals and toxic metals are being cleaned, making this city suitable for holding real estate business.

Investment Opportunities in Commercial Real Estate in Varanasi

The top locations in Varanasi having the best opportunities to invest in are as follows: 

1. Mohansarai

It is a very fast-growing area of Varanasi with great connectivity, providing easy access to daily employed individuals to travel here. Moreover, it is near to many crowded residential areas, reducing the transportation cost and time of daily office-goers.

2. Varanasi Cantt

The area of Varanasi Cantt is very close to the nearest railway station and connects many important areas. Moreover, this locality witnesses a good lifestyle and a standard society to promote real estate establishment.

Also Read: Guide for Coimbatore Commercial Real Estate Investment

Things to Keep in Mind Before Buying a Commercial Property in Varanasi

The main things to keep in mind before buying a commercial real estate property in Varanasi are as follows:

1. Proper Market Research 

Investing in commercial real estate involves a lot of fraudulent activities and hence, needs a substantial amount of market research. Moreover, proper market knowledge will save you and your property from huge market risks.

2. RERA Verification

The Real Estate Regulatory Authority (RERA) is a statutory body promoting transparent transactions between real estate agents and buyers, and it was notified by the RERA Act 2016. You can check the authenticity of the builder and their property in Varanasi by visiting the RERA website of Uttar Pradesh.

3. Lease Structure

A lease is a legal contract between a commercial space owner and occupier to identify any risk involvement. It must be comprehended on your part while assessing and analysing any investment.

Stamp Duty Rates in Varanasi

The stamp duty rates for commercial real estate sales in Varanasi, Uttar Pradesh, are in the following table:

Note: In some cases, women are offered a 1% reduction in stamp duty charges in the state of Uttar Pradesh to encourage more women in this business sector. However, the maximum reduction is ₹10 lakhs out of the total transaction value of a property.

Registration Charges in Varanasi

The lists of registration charges in Varanasi, Uttar Pradesh, are as follows:

It is essential to consider the stamp duty rates and registration charges as they will be a part of your investment amount. These charges should also be noted while planning the budget.

Commercial Real Estate Sector of Varanasi: What’s the Forecast? 

The Indian Railways will offer approximately 3 lakhs square feet of commercial space for further development in Varanasi to aid its Smart City Project. Moreover, the reserve price for this commercial development is fixed at ₹24 crores. 

With further improvement of the Varanasi Bypass Ring Road project worth ₹261 crores, the growth opportunities and infrastructure of this city are witnessing a substantial rise. 

As Varanasi is a Tier II city, you can expect rental yields from commercial properties to be as high as 12-15%. 

Commercial Real Estate vs Other Asset Classes

The comparison between commercial real estate and other asset classes is conducted on the basis of the following:

• Commercial Real Estate vs Gold

Real estate is a very stable investment option that helps to generate passive income. On the contrary, gold is just a commodity with higher volatility and risks of getting stolen.

• Commercial Real Estate vs Stocks and Mutual Funds

Commercial real estate offers assured returns with direct asset ownership if we compare them with the stock market on an aggregate level. On the other hand, stock market and mutual fund witness great fluctuation with higher risks but provide comparatively higher returns.

• Commercial Real Estate vs Residential Real estate

Residential property faces a lack of demand than commercial space, especially in the premium category. Moreover, it needs to be leased on an annual basis, but office spaces can be leased for longer tenures.

Discover More: Guide for Varanasi Residential Real Estate Investment

• Commercial Real Estate vs Bonds

Commercial real estate investments are less liquid than bonds due to their higher transaction costs resulting in a long time to find property buyers. Moreover, commercial real estate investment is exposed to the credit risk associated with tenants who need to make timely lease payments. 

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 Varanasi

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

Step 1: Estimate your budget and calculate your amount of investment. 

Step 2: Conduct proper market research on the sites that have price appreciation potential. 

Step 3: Shortlist a few affordable sites. You can also take the help of an agent to get the best deals.

Step 4: Plan a field visit to each site and examine them properly.

Step 5: Finalise a commercial property that is suitable and prepare all the official documents like title deed, property assessment extract, foundation certificate, etc.

Step 6: After finalising, make the total payment and purchase the property. Make sure to complete the stamp duty and registration charges payment formalities. 

Step 7: Pay service fees to real estate consultants and brokers if you availed their services.

Step 8: Consider purchasing an insurance plan for your new property to protect yourself financially.

Read More: Guide for Raipur Commercial Real Estate Investment

Final Word

Considering the city’s rapid industrial growth and development, Varanasi’s commercial real estate sector is seeing positive connectivity and infrastructure changes. Moreover, the employment rate in this city is also increasing when compared to other cities in the state. All these factors are attracting promoters towards this area to build office spaces.

Frequently Asked Questions