To maintain cash flow, many developers currently list between 25 and 40% of their office supply for condominium sale.

According to a report by ANAROCK Property Consultants, property developers are looking for alternatives to inject cash through the sale in strata of commercial assets.

Strata selling is the sale of assets to retail or individual investors.

To maintain cash flow, many developers currently list between 25 and 40% of their office supply for condominium sale.

According to ANAROCK Property Consultants Chairman, AnujPuri, co-ownership of office and retail space is becoming a lucrative option for a few developers to maintain cash flow.

The current average rental yield is 3% of the units.

The report adds that rentals of Class A commercial assets yield 8-10%, while Class B properties generate between 6-8%.

According to ANAROCK, the average ticket size for commercial space investment is approximately 10 lakh in Tier 2 cities, while in Tier 1 cities, the ticket size of commercial space investment is as high as 10 crores.

In early 2019, real estate giant Prestige Estates announced plans to sell 25% of its office assets in strata to individual investors looking to enter the competitive high-yield real estate asset markets.

The report says what appears to be a “rare win-win” situation for real estate investors and developers in the current situation is that the former can earn high returns and the latter can generate cash for the business expansion.

Strata sales for developers also eliminate the need to manage commercial properties. This allows them to consolidate their rental business, AnujPuri added.

According to ANAROCK, the rolling return on investment, or ROI, in residential real estate is attracting more high net worth individuals and NRI investors. These investors previously focused on luxury real estate with commercial spaces sold in strata.

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