INDIA-How to invest in commercial property

When times get tough, commercial property provides the perfect backdrop. Abandoned office blocks, half-finished developments surrounded by barbed wire and cranes standing idly on the skyline: in an economic downturn, real estate is one of the first sectors to suffer.

With this in mind, most investors approach commercial property with caution. Memories of the crash of 2008-09, in which many office development

s ground to a halt, are still strong. So for those investors keen not to get caught out again, what are the best ways to tap into the opportunities in the sector without taking on too many of its risks?

Commercial property encompasses retail, industrial estates and office blocks. “[It] can refer to anything from the acquisition of a local Domino’s franchise to negotiating with the Barclay brothers to acquire their prized Ritz hotel on London’s Piccadilly,” says Edward Minter, a development consultant at Black Brick, an independent property buying agency.

And while the majority of investors are unlikely to be taking tea at the Ritz — let alone buying the hotel — Mr Minter’s point is a good one. Properties — or lots, as they are known — bought in the commercial sector tend to be much larger than purchases in the residential market. Norway’s sovereign wealth fund, for example, recently snapped up a 150-year lease on 25 per cent of Regent Street, one of London’s main shopping centres.

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