Keystones Konsultantis a boutique business backed by renowned industry leaders, delivering solutions across India and abroad.
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Email: info@keystoneskonsultant.com
Registered Office: 1267, Sector 15, Part 2, Gurgaon-122001
Branch Office: Ambadeep Building, KG Marg, Connaught Place, New Delhi, Delhi 110001
PRE-LEASED & PRE RENTED
Preleased Property is a commercial real estate property that is an income-generating asset, with tenants in place, and also offers a stable and predictable return on investment.
Understanding Pre-Leased Properties and their Benefits
Pre-leased properties are those, which already have tenants and ensure fixed income or assured returns. Such properties come with several benefits like higher capital appreciation, regular income, and zero waiting periods. However, due diligence is a must before investing in these properties. Here is a brief guide on pre-leased properties and their intrinsic aspects.
Pre-leased properties have become increasingly popular, especially in the commercial real estate segment. To put it simply, pre-leased properties are the ones that are already leased out at the time of sale, and the investor continues with the lease to earn steady returns.
According to a research report, Ultra-High-Net-Worth Individuals (UHNIs) prefer investing in Grade-A pre-leased commercial units. This is because pre-leased properties offer fixed income from high-quality tenants, and investors can exit the market with capital appreciation. However, the rate of capital growth would be subject to the holding period and the market scenario.
Commercial properties mainly come in leasehold (from Government organizations like MIDC with 99-year tenures) and freehold (buyer gets the exclusive property and land ownership) avatars. Most pre-leased commercial deals take place in the freehold segment in India.
Advantages of Pre-Leased Properties
Pre-leased properties come with numerous advantages. To name a few:
Zero waiting periods: Investors do not have to wait for a single day to earn returns on pre-leased Properties. These properties already have tenants, and investors immediately start earning monthly rentals after the transfer of the lease deed.
Capital appreciation: Values of pre-leased units usually increase handsomely against vacant properties. Units in prime areas with great amenities and infrastructure may also offer higher appreciation. Hence, buyers with a longer investment horizon may benefit from a good appreciation of capital investments.
Assured monthly income: When the investor gets the lease transfer on the commercial unit, the legal right to receive monthly rentals is part of the deal. Thus, these properties ensure fixed and assured income each month.
High liquidity: While finding a potential buyer may be challenging in real estate, pre-leased commercial properties are easy to sell. Many investors prefer these assets, thus ensuring higher liquidity.
Rental discounting facility: Lessors can apply for term loans at low-interest rates against the rental income of their pre-leased commercial unit. This will help lessors raise more money on the underlying value of the property and the discounted value of the monthly rentals.
Predefined periodic increase in rentals: With these investments, buyers do not have to worry about rental growth. Agreement renewals also ensure periodic rental increases.
Lower risk: Investors face lower risks in pre-leased properties as they offer guaranteed income and handsome returns. The chances of tenants vacating these properties before the expiry of the agreement are always slim.
Concerns for Investors in Pre-Leased Properties
There are some concerns that one should address before investing in a pre-leased property. These include:
Higher capital value: The market value of the pre-leased property is always higher than the vacant commercial unit. Buyers should review the price difference between these two properties and decide accordingly.
Tenant quality: Investors should assess tenant quality and credibility, including their financial position and credit history, before finalising the deal. The purpose is to ensure that they pay rentals promptly.
Lease duration: Checking the commercial lease term is a must since finding new tenants is a time-consuming affair. Ensure that the lease is for a longer term.
Taking professional advice is always the best option before choosing a pre-leased property. Also, check the lease duration, tenant details, and property values of similar properties in the area before putting down your hard-earned money. If you play your cards right, pre-leased properties can turn into rewarding investments in the future.
Frequently Asked Questions
Q. What is the meaning of pre-leased?
A. Pre-leased properties are the ones that are already leased out at the time of sale.
Q. How does a pre lease work?
A. An agreement is signed between a landlord and a prospective tenant to enter into a lease at a date in the future, contingent upon the satisfaction of certain conditions
Difference between why invest in Preleased and under-construction in commercial properties
–>Why to invest in Pre-Leased Property?
Pre-rented commercial property attracts more customers at the time of sale and are considered the safest investment option. Such properties are categorized into Retail Shops,
Commercial Offices, Warehouses, stand-alone building etc.
• Safe and Secure Investment
• Ready to Move Property
• No Chance of false commitments from the builder
• Rental from the day one of your investment
• Easily Disposable Investment in case of any financial emergency
• Higher appreciation as compared to New Projects
–>Why to invest in Under Construction Property?
Buyers get many options of under construction properties. The wait may be
longer but it is worth the cost. … Higher appreciation: Since you are buying at
a lower cost the appreciation is expected to be higher. As the construction progresses, the price of your property also increases.
• Price bubble of Under Construction Property
• Re-Sale of Under Construction Property
• Difference between Pre-Launch Rate and Current Rate
• New Construction of Property
• Payment Flexibility
• Discount & Offers
–>Choose Property Space Pre-Leased & Under Construction Property in Commercial Market and the Space / Building Categories are: –
• Stand Alone Buildings Space
• Office Space
• Bank Space
• Retail Space
• Ware House Space
–>Choose Property Location in INDIA
• Delhi NCR
• Mumbai
• Bangalore
• Pune
• Hyderabad
• Chennai
• Kolkata
Whether you are willing to invest ₹ 1Crore or ₹ 1000 Crores, Your choice of the budget would help in identifying the right investment option and thus saving your valuable time.
Submit Details and Relax, Our Property Expert will contact you, note down your exact requirement, provide the right suggestions and covert your dreams into reality. Thus, providing a win win situation for you as an investor. This is the only type of investment where the buyer as well as the seller, both are the kings and feel blessed.
Our Offerings in Investment Advisory includes:
✓Property Investment
✓Pre-leased | Pre Rented
✓Portfolio Management – RE Assets
✓Commercial due diligence
✓Lease abstraction & analysis