Any discussion regarding real estate investments in Lucknow inevitably centers around residential projects. However, there is a different side to the story and investors who can afford to venture out of their comfort zone might find something interesting on this side too.
There are diverse types of commercial RERA property Lucknow holds and these are available as retail shops, mixed-use projects, and office spaces in ever-expanding business hubs. It becomes necessary to understand the functioning of each type, their potential returns, and the quality of projects that might be worth investing in.
Why Commercial Real Estate in Lucknow Now
The commercial RERA property Lucknow is a hot topic in the real estate sector these days and the timing here plays an essential role in the process of decision making. The economic profile of the city is growing, there are more professionals in Lucknow, and the requirement for quality commercial spaces is increasing in well-connected areas of the city.
Previously, commercial property in Lucknow used to be concentrated only in places like Hazratganj and certain sections of Aminabad. However, this trend has shifted. Now, Gomti Nagar, Vibhuti Khand, Shaheed Path, and Gomti Nagar Extension form the commercial spine of the city and projects in Lucknow through these routes are attracting existing companies as well as newcomers to seek professionally managed commercial properties.
From an investor’s point of view, the investment cost is still very favorable compared to other commercial investments in cities such as Delhi NCR and Mumbai, while the return on investment is becoming increasingly attractive.
What RERA Means for Commercial Buyers
Similarly, RERA registration is valid for commercial properties too, much like residential properties, and is highly important from a buyer’s point of view. Commercial property registered with RERA in Lucknow enjoys legal obligations for time-bound completion, compulsory escrow accounts for the project finances, and a clear system of complaints if the developer fails to complete.
This, in effect, means that the risks associated with investing in commercial retail shops and offices in under-construction projects has become highly minimized since the introduction of RERA. This is especially true in the case of RERA compliant projects.
Always ensure that the project you buy is RERA compliant. You can use the UP RERA website to do so within a matter of minutes.
Retail Shops: The High-Yield Option
Investment in retail shops in the most commercially viable projects in Lucknow usually offers better returns, around 6 to 9%, making retail shops investment an attractive option for investors seeking stable rental income. However, the downside is that the initial capital requirement is high for a square foot, and there will be more extended vacancy periods after a tenant leaves.
It is suitable if the property has a residential and commercial combination. A retail shop located at the bottom of a multi-story residential building with hundreds of flats upstairs automatically provides a client base for the business. Thus, the demand for the space and revenue flow can be sustained despite market fluctuations, further strengthening the appeal of retail shops investment.
Shops in stand-alone commercial properties that are proximate to office zones or catchment areas for institutions such as hospitals and educational facilities fare well. However, what should be avoided are retail spaces in poorly planned projects in terms of foot traffic or those in locations without significant population density of either type of development nearby or a reputation for the developer of not bringing in anchor tenancies, as these factors can negatively impact retail shops investment returns.
Current retail shops’ unit size varies between 200 to 800 square feet.
Office Space: Growing Demand, Improving Supply
Commercial real estate in Lucknow has traditionally lagged behind its residential counterpart in terms of development quality. This trend is changing as a new generation of office spaces emerges, offering quality offices, business centers, and conventional office floors meeting the needs of corporates, IT firms, and other professional services organizations.
The most vibrant areas when it comes to quality office supply and demand include Vibhuti Khand and Gomti Nagar Extension. The emerging office corridor is expected to be Shaheed Path due to the maturing infrastructure and increased presence of large commercial developments.
Managed office spaces in Lucknow are easier to invest in than standalone retail stores in terms of management. Investors can expect a return on investment of about 7 to 8% from such developments as long as the offices are well-managed. Moreover, the management burden is significantly reduced compared to retail spaces.
In addition to that, The rising demand for modern office space in Lucknow is creating new investment opportunities backed by improving infrastructure and commercial development.
Choosing the Right Commercial Project
Following RERA registration, the other filters used in selecting investment in the commercial space in Lucknow include location, developer’s performance, composition of tenants, and management structure.
Location impacts foot traffic for retail investments and convenience for office tenants. Performance of the developer dictates if the project will be completed on schedule and efficiently after possession. Composition of tenants impacts stability of the income. And the management structure dictates the level of active involvement required from the investor.
A commercial investment in a property located in a strategically positioned, RERA-approved project developed by a reputable developer and having a professional facility management arrangement can be regarded as an almost passive investment in the commercial sector in Lucknow. These features may not be easy to come across in one project, but they do exist in today’s market environment.
Investing in Commercial RERA properties in Lucknow is no longer a specialty issue. The growth in infrastructure, business activity, and protection of the buyers through regulations has led to the rise of the sector as a viable investment option. With rapid infrastructure growth and rising commercial demand, investing in a premium office space Lucknow project can be a smart move for investors looking to benefit from the city’s expanding real estate market.
