The Indian commercial real estate market was valued at around USD 49.30 billion in 2025 and is expected to grow significantly to USD 128.40 billion by 2030. This expected growth reflects a compound annual growth rate (CAGR) of above 21.1%.
Commercial properties provide a greater return on investment through higher rental yield, stable tenancies, and long-term leasing contracts, which makes it ideal for such investments for High-Net-Worth NRIs.
Let’s find the reasons behind the soaring interest of NRIs in the country’s commercial real estate market and the top-of-the-line investment opportunities available.
Why Commercial Real Estate is a Lucrative Option for NRIs
Owning or investing in commercial real estate (CRE) in India has become a major focus for High-Net-Worth NRIs due to the steadily growing market, better rental return, and long-term appreciation of property value. Here’s why investing in commercial real estate is proving to be far more profitable for NRIs:
Higher Rental Yields Compared to Residential Properties
One of the major factors that lead to the preference of NRIs in putting their money in commercial real estate as opposed to residential is the ability to get significantly higher rental income.
Typically, residential properties offer rental yields of around 2-3% annually, making it difficult for investors to generate substantial passive income. In contrast, commercial real estate can yield anywhere between 7-10% annually, depending on the location and type of property.
Growth of IT Parks, Retail Spaces, and Co-Working Hubs
The phenomenal growth of IT, E-commerce, and retail sectors is driving the expansion of commercial real estate properties in India. All major international companies are establishing their headquarters and offices in the metropolitan cities of India. With the growth of e-commerce, there is an increased need for warehousing and logistics facilities.
Some of the important factors of commercial properties are:
- IT Parks and SEZs (Special Economic Zones): American and European multinational companies are establishing their branches in Bangalore, Pune, Hyderabad, and Gurgaon, which are Grade A office spaces.
- Co-Working Spaces: Startups and other enterprises have stimulated demand for flexible workspaces termed co-working hubs, which help to invest in commercial properties with high returns. A Knight Frank report estimates a 15% rise in demand for co-working spaces over the past year.
- Retail and High-Street Spaces: The increasing buying power of consumers is driving demand for retail trade in shopping malls, high streets, and commercial complexes, along with the growing demand for retail shop outlets.
Read Also: Evaluating the Long-term Appreciation of Luxury Properties in Indian Metro Cities
Stable and Long-Term Corporate Leasing Agreements
Another advantage of investing in commercial properties is the long-term leasing agreements offered by corporate tenants. Typically, commercial spaces such as offices, retail outlets, warehouses, and logistics hubs have lease durations of 3 to 9 years, providing predictable and steady income for the investor.
Moreover, these leases often include built-in annual rent escalation clauses, which means the rental income increases, further enhancing the investment’s profitability. This stability is especially appealing to NRIs who seek long-term passive income without the hassle of frequent tenant turnover.
Best Commercial Investment Options for NRIs
With the expansion of commercial real estate, there now stands a new opportunity for investment by Indian Diasporas. High-net-worth NRIs looking to cash in are presented with multiple investment options promising moderate to high-yield returns with little misappropriation of the investment. The options that are most beneficial are:
Grade A Office Spaces in Business Hubs
Investing in Grade A office spaces in prime business hubs such as Bandra-Kurla Complex (BKC) in Mumbai, Cyber City in Gurgaon, Manyata Tech Park in Bangalore, and HITEC City in Hyderabad is a profitable choice for NRIs.
These business districts house multinational corporations, tech giants, and large enterprises, ensuring consistent demand for premium office spaces.
Why it’s Profitable:
- Higher rental yields of 8-12% per annum.
- Long-term leasing agreements (3-9 years).
- Higher asset appreciation in prime business hubs.
Potential Locations:
- Mumbai: BKC, Lower Parel, Powai.
- Gurgaon: Cyber City, Golf Course Road.
- Bangalore: Manyata Tech Park, Whitefield.
Read Also: How To Invest In Commercial Property In India?
Retail Spaces and Malls in High-Footfall Areas
Another lucrative investment opportunity is retail spaces in high-footfall commercial areas or shopping malls. With increasing consumer spending, retailers are constantly seeking prime retail outlets in malls or high-street markets, offering investors a consistent rental income stream.
Why It’s Profitable:
- Rental returns of 12-35% annually.
- Low tenant turnover in premium retail outlets.
- Strong potential for capital appreciation.
Ideal Locations:
- Mumbai: Linking Road, Colaba Causeway.
- Delhi: Connaught Place, Select City Walk Mall.
- Bangalore: MG Road, Brigade Road.
Warehousing and Logistics Hubs
The rapid growth of e-commerce, logistics, and supply chain infrastructure has fueled demand for warehousing and industrial hubs. NRIs can invest in large logistics parks, fulfilment centres, and industrial warehouses, which offer long-term leasing agreements with e-commerce giants and logistics companies.
Why it’s Profitable:
- Consistent rental income from long-term leases.
- Rental yields of 5-10% per annum.
- Growing demand due to the e-commerce boom.
Ideal Locations:
- NCR (Delhi): Gurgaon, Noida.
- Mumbai: Bhiwandi, Navi Mumbai.
- Bangalore: Electronic City, Devanahalli.
Pre-leased Properties for Passive Income
For NRIs who seek instant rental income, investing in pre-leased commercial properties is highly beneficial. These properties already have established tenants with signed leasing agreements, ensuring immediate cash flow without any vacancy risks.
Why it’s Profitable:
- Guaranteed rental income from day one.
- Minimal involvement in property management.
- Higher occupancy rates.
Legal & Financial Aspects for NRIs Investing in Commercial Real Estate
While investing in commercial real estate offers significant rewards, NRIs must navigate specific legal and financial regulations and ensure compliance with Indian property laws.
FEMA Regulations and Repatriation Rules
The Foreign Exchange Management Act (FEMA) governs property transactions for NRIs in India. Key points include:
- NRIs can purchase commercial properties without government approval.
- Rental income can be repatriated abroad through NRO or NRE accounts.
- Funds for property purchases must be transferred through formal banking channels.
Commercial Real Estate Taxation for NRIs
NRIs must pay taxes on rental income and capital gains from commercial properties:
- 30% TDS (Tax Deducted at Source) on rental income.
- 20% long-term capital gains tax on property sale after 2 years.
- Option to claim tax benefits under Double Taxation Avoidance Agreement (DTAA).
Loan Options and Financing for NRI Investors
NRIs can access commercial property loans from Indian banks such as:
- HDFC, ICICI, Axis Bank – Offering loans up to 70% of the property value.
- They have a loan tenure of 10-15 years.
- Offer loans at competitive interest rates (8-10% per annum).
Conclusion
Investing in Indian commercial real estate offers High-Net-Worth NRIs a strategic opportunity to build wealth, generate passive income, and benefit from long-term capital appreciation. With increasing demand for Grade A office spaces, retail outlets, and warehousing hubs, the commercial property market is poised for substantial growth.
Whether you are looking for high-yield rental income, long-term asset appreciation, or passive income streams, commercial real estate in India offers a promising avenue. Explore premium commercial investment opportunities at Rustomjee and begin your journey toward sustainable wealth creation.
FAQs
- What advantages does Indian commercial real estate offer for high-net-worth NRIs?
It provides potential for stable rental income, significant capital appreciation, and portfolio diversification, benefiting from India’s growing economy and urban development.
- What legal and regulatory factors must NRIs consider before investing?
NRIs need to comply with FEMA and RBI guidelines, understand property ownership restrictions, and ensure proper documentation. Consulting legal and financial experts is highly recommended.
- What key factors should be evaluated when selecting a commercial property investment in India?
Investors should assess the location, market demand, property quality, future infrastructure developments, and potential rental yields, along with overall economic trends and regulatory stability.
