Mixed-use properties are not a new concept in the real estate industry; rather, they have been around for a long time. However, a major transformation in consumer mindsets and social norms has fanned its growth and popularity in recent years. Unlike traditional property options, where an investor has a very narrow choice of sticking to a particular property benefit, mixed-use properties not only guarantee an augmented return but are also safe. A mixed-use property is a combination of two or more different types of real estate products and services that are combined and offer the same benefits, or both options. It can have multiple uses and a self-sustainable ecosystem, which makes it a more preferred investment option in real estate than others. Let’s dig out the reasons behind the success of investment in mixed-use properties.

A new trendsetter: According to Times of India news of 2023, commercial real estate has attracted 40% of private equity outlays. Which again advocates the idea of higher return potential through commercial properties. Similarly, a survey also reveals that 52% of NRIs expressed their will to invest in the Indian commercial property segment. Since commercial property segregation offers the maximum return compared to residential, investors prefer to invest in it. However, commercial property investors have their limitations and are subject to various factors. As a result, the growing trend for mixed-use property offers them a secure and growth-driven investment option.

Emerging presence in new cities: Various news posts and reports clearly state that Tier 2 cities are witnessing a new dawn in the realm of real estate as a mixed-property solution. Investors prefer investing in Tier 2 cities because of various factors such as affordability, price stability, a less competitive market than metro cities, etc. There are various factors, such as technological advancement, cost advantage, availability of skilled labor, rapidly developing infrastructural facilities, growing population-led urbanization, etc., that cause the paradigm shift in the real estate sector, preferably in Tier 2 cities.

The reasons:- Various factors drive the popularity of such property options. Most importantly, these options are not confined to a particular location but span different areas. However, the most speedy transition has been witnessed in Tier-2 and Tier-3 cities. It not only helps to diversify the portfolio but is also a profitable and economically stable option for developers, investors, and customers alike. Moreover, there are other beneficial features attached to it that make it a good investment option, such as:

Less risky: Mixed-use property options are less risky than other property solutions. In other terms, we can say that mixed-use properties have the benefit of two or more areas, like residential and commercial, as well. This means that investors still enjoy the benefits even if there is less occupancy in another property. Similarly, there are luxury theme commercial properties that assure a greater return and are also available on a profit-sharing basis. One may choose the payment plan accordingly to get the maximum benefit from it.

Great potential for value appreciation: Since mixed-use properties offer a greater return than residential properties, they are very popular among investors. However, a careful analysis of the different property options may yield some great solutions to further augment them. The reason is simple: choosing a property that is strategically located or aligned with government vision not only secures the investment but also promotes growth more prominently.

Change in customer mindset: The rise of various start-ups and e-commerce ventures is also playing a vital role in further promoting the trend of mixed-use properties. The increasing demand for setting up new ventures at ease of convenience to customers and market proximity led the companies to look for different locations for warehousing and logistic supply to ensure last-mile delivery.

Diversified Income Benefit: Since such properties are combinations of two or more sectors, verticles, or property types, they offer a greater return while combining the returns from both sectors. They can host a variety of tenants, such as retail, office, rental, and residential. If a vertical or section is not earning enough yield, another section or vertical can help the investor stabilize their income.

Increasing popularity: Such properties are in high demand by investors and companies alike. The companies prefer properties where they can easily target and reach their customers. Similarly, consumers also seek ease in reaching them. Besides, it also establishes a great balance of time and convenience for those who have a common place for living, shopping, and working. Such properties are in prominent demand in urban and suburban areas.

Less vacancy rate: Mixed-use properties have a lower vacancy rate than traditional property solutions. Since all the amenities are easily available and clubbed under one project, people rarely tend to migrate. Moreover, because of high demand, such properties have a very short vacancy time.

Good for Zoning and Community Development: The mixed-use properties are also preferred by various municipalities as they reduce traffic, promote healthy living through walking, and contribute to greater community development. Such properties require less time to get approval from the municipal corporation and are preferred by them as well.

Conclusion: In today's competitive world, investments are always subject to market risk. It has become inevitable for real estate developers to come up with a property solution that not only secures an investor's hard-earned money but also provides a secure way of returning it to them. Investment in mixed-use properties indeed presents a greater opportunity for them, and choosing the right location in tier-2 or tier-3 cities to park their money can yield greater benefits for them.

• commercial property
• Mixed property
• Mixed commercial property
• Mixed use property