Mumbai Office Real Estate: Amitabh Bachchan has given 4 units of commercial office space having a cumulative area of 10,000 sqft. According to the rental agreement, the rent will increase to Rs 2.38 crores per annum from the fourth year.
Recently a lot of Bollywood stars have been investing in commercial real estate and office spaces. The reason for this is the rental yield, commercial real estate provides better returns as compared to residential properties.
The veteran Bollywood megastar Amitabh Bachchan has rented out 4 commercial spaces with a massive combined area of 10,000 sqft. The properties are located in the Oshiwara area of Mumbai, the Financial Capital of India. The rent agreed for these spaces is Rs 2.07 crore, Amitabh Bachchan also received Rs 1.03 crore as a security deposit. The deal is for 5 years and at the receiving end is the major music company, Warner Music India Limited. The annual rent will increase to 2.38 crores at the beginning of the fourth year of the agreement. The real estate website Propstack.com has revealed this information, by accessing the documents related to the deal.
These properties were bought by Amitabh Bachchan in August of 2023. The four units were purchased for Rs 7.18 crore each. The offices are located in the business hub of Oshiwara, Mumbai.
Amitabh Bachchan is not the only star to invest in commercial office Real Estate. Besides Bachchan, Kartik Aryan, Manoj Bajpayee, and many others are investing in commercial spaces all across Mumbai. This Mumbai Real Estate Update is reaffirming the trend of movie stars buying commercial real estate. The reason is quite simple: rental yield, earlier the stars used to buy bungalows and other residential real estate, but commercial real estate has high rental returns. Which makes them the first choice of the Bollywood stars.
What is the Deal?
Bollywood megastar Amitabh Bachchan has taken a strategic step in the realm of real estate by renting four units with a lock-in period of three years, accompanied by an allocation of 12 parking spaces. This significant move, as documented, was formalized with a stamp duty payment of Rs 2.88 lakh on November 30, 2023, and the transaction is set to commence in March 2024.
While Warner Music India Limited, the counterpart in this transaction, is yet to respond to an email query, Bachchan’s stance on this real estate venture remains elusive as attempts to reach him for comments have been unfruitful.
What is a Rental Return?
This growing trend of Bollywood luminaries investing in commercial real estate is underscored by the allure of annual rental yield in comparison to the residential sector. Experts emphasize that commercial assets generally yield higher returns than their residential counterparts. According to CBRE India, a renowned real estate consultancy firm, commercial properties like offices, retail spaces, and warehouses typically boast gross yields ranging from 6 to 10 percent in metropolitan cities.
It’s imperative to understand the concept of rental yield, which quantifies the annual income a property owner garners through renting out their property. For instance, if a property worth Rs 1 crore in Mumbai generates an annual rent of Rs 8 lakh, the rental yield for the owner stands at 8 percent.
This strategic move aligns with a broader industry trend where Bollywood celebrities are recognizing the potential of commercial real estate. In a similar vein, Salman Khan leased out a substantial 27,650 square feet of space across four floors to TNSI Retail Private Limited, a subsidiary of Future Retail Limited, at a monthly rent of approximately Rs 89.6 lakh in 2022.
In 2021, director Karan Johar entered the commercial real estate arena by leasing two properties owned by Dharma Productions. The monthly rents for these spaces were recorded at Rs 17.56 lakh and Rs 6.15 lakh, respectively, showcasing the increasing inclination of Bollywood personalities towards strategic investments in the commercial real estate landscape.
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