Commercial Real Estate Investment in Kolhapur

Kolhapur is an inland city in the Kolhapur District of South West Maharashtra and it’s situated on the banks of the Panchganga River. The religiously rich heritage of Kolhapur gives its name as the “Kashi of the South”. 

Kolhapur is popular for its unique artistry which is exported worldwide. The most popular example of this is the ‘Kolhapuri Chappal’ which is a traditional slipper in India with one of a kind design. Moreover, sugar refineries in this city process over 50 lakh metric tonnes of sugarcane annually and the entire sugar cane sector in Kolhapur gets more than ₹13 billion to India’s economy.

Multiple large-scale industries contribute to the economy of Kolhapur. That is why it is among the most significant contributors to the commercial output of Maharashtra. Manufacturing, trade and transportation are the largest contributors to this city’s economy. Kolhapur has an estimated GDP per capita of ₹7.2 lakh ($8,800), which is much higher than the national average of $2,256.

Therefore, the commercial real estate sector in this city has endless opportunities due to such a strong commercial presence. If you want to invest in a commercial property in Kolhapur, keep reading the details given below.

Top Reasons to Invest in Kolhapur Real Estate

You should invest in a commercial property in Kolhapur due to its rich business sector and opportunities for the real estate market. Refer to the reasons given below to understand why investing in Kolhapur real estate is a profitable idea.

• Industrial Hub

Kolhapur is one of the busiest industrial hubs with multiple sectors contributing to a major part of its economy. The iron and casting industry is a major sector in Kolhapur. Machinery parts, agricultural implements, metal wires and several other products are manufactured on a large scale and exported to several countries in Africa and Asia. This industry in Kolhapur earns more than ₹15 billion from manufacturing exports and the amount is growing each year.

• Textile and Agriculture Hub

Kolhapur has a very rich textile industry which is popular for its unique artistic designs and production. Cotton apparel like dhotis and saris are manufactured in this city. Currently, popular clothing names like Raymonds operate from this city and sell all across India.

Kolhapur is one of the largest agricultural produce contributors to Maharashtra. The chief crops in this city are sugarcane and rice. Kolhapur is also renowned for sugar production and is thus called the “Sugar bowl of India”.

• Gold and Silver Industry

Besides textiles, Kolhapur also produces uniquely designed gold and silver jewellery. Artistic pieces of jewellery from Kolhapur have popular demand in India and the rest of the world. This industry alone offers a turnover of crores each year and is one of the largest cottage industries in the state.

• Passive Income

By purchasing a commercial property in Kolhapur, you can earn a good passive income by renting or leasing out your property. Warehouses and other commercial properties are in high demand in the business sector of this city.

Commercial Real Estate Investment Opportunities in Kolhapur  

You can invest in one of the following places in Kolhapur to maximise your returns:

• Ichalkaranji

This locality is a textile hub of Kolhapur and has over 5,000 textile factories. It is the highest-grossing textile locality in this city and a hotspot for commercial real estate. You can rent out warehouses and industrial units at a decent price. The cost for a property in this city is between ₹10 lakh to ₹15 crore.

• Rajarampuri

Rajarampuri is a popular locality in Kolhapur and is one of the most developed areas. It is a location known for educational institutes in the area and has developed into an upcoming education hub within the city. In addition, this area is also well connected to the rest of the city via road transport and trains. The price range for commercial properties in this locality ranges between ₹10 lakh to ₹1 crore.

Things to Consider before Buying a Commercial Property in Kolhapur

Before you purchase a commercial property in Kolhapur, you should consider several factors that can affect the returns from your investment.

• Connectivity

Connectivity is an essential feature that can influence the demand for your property. Your property should be conveniently located at a prime location with good connectivity to the rest of the city. This will attract better prices for your commercial property and it will always generate good returns.

• Infrastructure

Highly developed areas with modern amenities and advanced infrastructure are in higher demand in comparison to other places. The infrastructure of the locality around a given property is an important value addition. 

Essential services like hospitals and police stations should also be close to your property and roads should be well-maintained. Other factors to check include the water supply, electricity backup, telecommunications, etc.

• Lease Contract

Always review your lease contract while buying a property and ensure that you are aware of all the norms and clauses. A lease contract is a legal commitment and hence, you should be aware if it suits your requirements.

• Property Developer

Properties made by reputable builders are usually of high quality and have good brand value. It is a profitable aspect for you as an investor. Tenants prefer properties that are associated with an established builder and hence, it will earn you good returns.

• RERA

All states in India have a dedicated governing body called Real Estate Regulatory Authority (RERA) for real estate trade and activities. The RERA is formed under the Real Estate Regulatory Authority Act, of 2016. 

This body ensures the transparency and safety of real estate activities in a state and safeguards the interests of an investor. That is why you should always check the details about a property and its builder from the official website of RERA Maharashtra before purchasing a property in Kolhapur.

Stamp Duty in Kolhapur

The stamp duty charges applicable for properties in Kolhapur are given below.

Registration Charges in Kolhapur

Registration charges applicable in Kolhapur for a different types of properties are given below.

Kolhapur Commercial Real Estate Sector: What’s the Forecast?  

Kolhapur is one of the fastest-growing commercial cities in Maharashtra and is known for having high GDP annually. It is a city with rich deposits of Bauxite and the fertile soil which produces good-quality sugarcane. The agricultural produce from this city amounts to the majority of jaggery production of the entire state and also India.

Several development projects are taking place in and around Kolhapur, which will boost the city’s economic growth. The Kolhapur Airport is undergoing a major expansion, including the addition of a new 4,000 sq mt terminal building. Over 60% of the project has been completed and it is expected to be fully completed by March 2023.

In addition, road infrastructure projects are in full swing in Maharashtra, with the State Government planning to build a network of 3,000 km of roads. The longest road network of these would be the Shaktipeeth Expressway, which connects 11 districts including Wardha, Latur, Solapur and Kolhapur. These measures are going to majorly boost the city’s real estate industry.

In addition, this city has a growing market of manufacturing and export which already produces revenue in billions. More expansion to all of these industries in Kolhapur will bring better opportunities for the real estate market in this city. Commercial real estate will see a sudden boom as demand for warehouses and rental spaces will spike in this city

Commercial Real Estate vs Other Asset Classes

The following is a brief comparison of commercial real estate against other asset classes:

• Commercial Real Estate vs Gold

Commercial real estate offers moderately high returns at moderate risks to investors in the long run. Commercial real estate also offers an opportunity for passive income through rental yield. On the other hand, gold offers lower returns in comparison to commercial properties and has a low-risk factor as well. 

• Commercial Real Estate vs Stocks & Mutual Funds

Mutual funds and stocks are market instruments that offer high returns. However, shares and funds also have a high-risk factor. Commercial real estate on the other hand offers moderately high returns at moderate risks. Stocks offer you diversification in your portfolio unlike in commercial real estate.

• Commercial Real Estate vs Residential Real estate

Commercial real estate offers higher returns than residential properties and has higher demand in the market. Residential properties are comparatively safer than commercial real estate and offer moderate returns. Passive income opportunity in commercial properties is also higher than in residential properties.

• Commercial Real Estate vs Bonds

Bonds are debt assets that offer low to moderate returns at low to moderate risks. These are fixed-interest instruments that investors prefer to park their excess funds. Commercial real estate on the other hand offers higher returns but carries higher risks. The returns are not fixed and depend on the quality of your investment. 

If you want to invest your capital in good quality bonds then check out the list of bonds on our website.

A comparison of the above assets based on returns, liquidity, risk, volatility and ticket price is given below.

Steps to Invest in Commercial Real Estate in Kolhapur

If you want to buy a commercial property in Kolhapur and you are not clear about the process, follow the steps given below.

Step 1: Select a broker to help you invest in a commercial property in Kolhapur. Experienced brokers have a good network in the market and can get you the best bargains.

Step 2: Fix a budget for your investment and keep the necessary funds available.

Step 3: Do market research and understand the recent trends and prices to make your search easier.

Step 4: Shortlist a few properties and visit all the sites in person with your broker. Check all the amenities and other facilities promised by the sellers.

Step 5: After you are satisfied with your search, finalise a property to invest your funds.

Step 6: Verify the details of the property and its developer from the official website of RERA and submit all documents required from your end.

Step 7: Once all the formalities are completed you need to make payments for the property and to your broker.

Step 8: Complete the registration process and pay applicable charges.

Step 9: Get insurance for your property to keep it safe from unknown financial threats.

Final Word

Kolhapur is a commercially developed city popular for its artistry and large-scale sugar cane production. It is a prime location for commercial real estate development and has a high potential to develop more in the future. 

The demand for the goods produced in this city is growing every day and hence, this is an ideal time to invest in a commercial property in Kolhapur. However, you should be careful about the risks and factors that can affect your investment and returns.

Frequently Asked Questions