February 2020 – The Mentor Group
Real Estate Opportunities in Educational Sector

Real Estate Opportunities in Educational Sector

As per the recent surveys, the Indian education sector is estimated to touch the 100 billion US dollar mark. As of 2018, there are around 40 thousand colleges and more than 900 universities in the country. The sustainable development schemes and policies of India give much importance to the educational sector. The Smart City mission is incomplete without the up-gradation of the educational institutes. The real estate developers have started to emphasize on adding this sector into their reality plans. The education business has attracted major investments by the leading players in the realty sector. The opportunities in education offer the unparalleled possibility for investment in regulate and non-regulated market. For the down-sliding real estate market, the educational land and properties are becoming as a savior. With the recent national initiatives for the educational vertical, the country has witnessed a significant increase in the market share of the education industry. There are schemes which have motivated investments from non-resident Indians (NRIs) and also opened doors for foreign educational institutes. Policies like 100% FDI via automatic route is allowed in the education sector. Along with this, the National Accreditation Regulatory Authority Bill for Higher Educational and the Foreign Educational Institutions Bill have opened up umpteen growth opportunities for the educational industry and real estate in parallel.

As per the survey by DTZ India, the demand for real estate would rise up to 5500 million square feet to achieve a GER of 30% by 2020 from the higher education sector. The opportunities for the real estate would include the development of educational institutes, hostels, student housing, retail spaces, and etc as the support services. Several developers have started to build amenities like staff-housing, recreational facilities, sports arenas, and etc which add additional revenue options. The construction opportunities are not restricted to the above areas but also to pre-school education services, primary, secondary and high schools. The government introduced exclusive benefits and incentives for the institutions developed for special students. In parallel, investment in vocational education services would increase the capacities of the current schools and give a boost to the employment index of the state and the country. The government promotes investment in educational development by allocating land with a hassle-free process, provide financial support, tax exemption and insurance support.

The recent trend of co-working spaces have brought exponential growth in the real estate market. With infinite benefits in investing in such spaces, the new buzz-word in the market these days is “co-living” spaces. With the advancements in cities like Bangalore, Mumbai, and etc in the educational vertical, the mobility of the students has increased. This floating population of students needs houses to live in keeping budget, hygiene, and security into considerations. The paying guest market today is unorganized and is not well monitored. Hunting for a room in a different city is always the scariest part in a student’s life. The real estate developers have focused this interest to student-housing and co-living spaces to cater to this need.

The future prospects of education and the realty market have great scope, opportunities, and potential. The REITs scheme could also be used for investing in educational centric realty options. The year 2020, could just witness a grand revolutionary change in the real estate market of India.


Reasons to Invest in Commercial Property

Reasons to Invest in Commercial Property

What is Commercial Property?

Commercial property is a real estate property that is usually used for business purposes only. A commercial property mostly refers to buildings that provide space to businesses; it may also refer to the land which is intended to generate profit. The commercial property has many implications like financing of the building, the tax treatment and the laws which are implied to it.

Investing in Commercial Property?

The key considerations for investors before investing in the commercial property must be through a rigorous assessment of their investment horizon, risk-taking capacity, the purpose of investment that is in as (diversification, long-term investment, and rental return).

It is important to consider the location of the project, project quality, lease covenants (rent, lock-in period, escalation, etc), micro-market performance and benchmarking before planning to invest in the commercial property. It is important to see whether the micro-market is preferred by a diverse occupier mix or a specific industry, this will be useful if the investment is in the future project of commercial property with no pre-leasing activity. Stable income-generating office assets must be a priority for regular income stream requirements, while few risks can be considered for future commercial projects based on the capacity to risk of the investor.

Reasons to Invest in Commercial Property

Reasons to Invest in Commercial Property:

Income potential – one of the reasons to invest in commercial property is the earning potential over residential rentals. Commercial properties usually have the purchase price between 6% and 12%, as per the area.

Professional engagements – Many Small business owners want to protect their livelihood and take pride in their businesses. For example, the landlord and tenant have a business to business customer relationship, which helps them keep interactions professional.

Operations at limited hours – usually businesses go home at night. In other words, they work when you work. The authorities or the monitoring service are in charge of taking care of any mishaps that take place in the property without disturbing the owner at midnight.

More objective price evaluations – It is usually easier to evaluate the property prices of commercial property as one can request the current owner’s income statement and determine the price based on it accordingly. If the seller is has a knowledgeable broker, the price should be set such where an investor can earn the area’s prevailing cap rate for the commercial property type they must be looking at (retail, office, industrial, etc.).

It has more flexibility in terms of the lease – a few consumer protection laws govern commercial leases, opposite of the dozens of state laws, like the security deposit limits and the termination rules that may cover the residential and commercial real estate.

Triple net leases – There are variations to triple net leases, but the general concept is that one as the property owner does not have to pay any expenses on the property. The lessee handles all direct property expenses, including the real estate tax. The only expense one has to pay is the mortgage. Strip malls have a variety of triple nets and are not usually done with smaller businesses, but these lease types are optimal and one can’t get them with residential properties.

Finding a co working space

Finding a Co-Working Space

Many startups begin their business from home, but the home office may not be a suitable place for work in the long run. Since in the future, the startup will eventually grow and would bring in more new people on board or need space and atmosphere to meet with customers. It may also become difficult to keep home and work life separate which may decrease the productivity of the business.

 What is a co-working space?

It is a place where remote workers can meet; small enterprisers can build a business with their staff and of course a space for freelancers.  There are many large enterprises such as Instagram and Timehop who have once used these spaces to grow their business. The advantage of having a co-working space is flexibility. Each co-working space is different in its own style and layout, like breakout areas, lines of desks, and enclosed setups with private meeting rooms. If you are thinking about owning a co-working space, it is important to pick the right one for your business. Below are quick tips for you to guide and help you out:

  1. Location fit as per your convenience

Ask yourself whether your office should be nearer to your home or your clients? Accordingly, choose the right place considering you are ready to travel to your co-working space. If it is mostly client-based business then it does make sense to go for co-working space where it’s easy for clients to visit the office space.

  1. Support you will receive

Once the spaces selected are shortlisted based on your choice of location, go for what each one offers. Startups should consider two basic options. First, you may choose an incubator that may offer higher levels of support. Secondly, you may choose an autonomous shared space that is open to all.

  1. Identify your space requirements

Are you looking for a dedicated work area, permanent writing space or just a normal desk?  Analyze how much space you would need on a daily basis.

  1. Look for resources and amenities

The need for essential and specific amenities is required for every business. If you have construction work you may need an area with a workshop or to build a model of the building. Get the space as per your requirements.

  1. Positive Aspect

Each co-working space is different in their own way be it is community or atmosphere. It is on you what you want for your business. You may look for a professional atmosphere or maybe a relaxed chilled environment. It is important that you go and visit the space before you get it. Ask questions about your space and what it is like to work there in that environment. Ask about whether the space is well-managed, what happens if you need help and how fast the issues are resolved. Then, accordingly, go for the right space.

In the end, look for space where you can promote your business. Place where the further network can be built which will help your business to grow and where you are able to organize events for your business which are easily reachable to the right target clients.

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