Commercial property is becoming an increasingly attractive prospect for first-time investors, thanks to its security. Low borrowing rates and high cost appreciation are just two of the many factors that make commercial property a safer investment than ever before.
Why security is a top reason to buy commercial property
Rather than single-use office parks, urban commercial property is often a hybrid between residential, co-working and retail space. The flexibility of mixed-use developments ensures they’ll be able to adapt to different needs in the commercial space, providing added longevity and stability. Investors benefit from the combination of startup-friendly premises and an established tenant base when they buy commercial property of this nature.
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Real estate investors may have been feeling cautious in the post-2008 crash economy, but low borrowing costs are once again making commercial properties an attractive option. Lenders are approaching the issue with caution nowadays. They prefer to offer mortgages for established commercial properties.
Reduced periods of vacancy
You may need to put forth a higher initial outlay to buy commercial property, but the rate of return will be correspondingly higher as well. Typically larger in size and with higher monthly rents, you could purchase a unit with a high monthly yield. At the same time, multi-unit properties are less risky when it comes to periods of vacancy. Because there are multiple tenants, you’re not relying on a single tenant for your monthly returns.
Another factor that minimises vacancy is that the typical lease for a commercial rental space tends to be longer-term in comparison to the residential market. In terms of capital appreciation, commercial properties could be a good long-term investment, with assured returns offered as a term of purchase in some cases.
There are many factors that make a commercial property a more secure investment. However, as with any real estate project it’s important to choose the right type of venture. Be sure to research the location’s commercial potential and any tenants carefully. Look for a property with transport connections. For commercial properties as well, the individual location is a decisive criterion for the property's price and its increase in value.
Whether or not you have some background in the commercial property sector, if you’re new to investing it’s best to seek out professional guidance from a range of sources before you buy commercial property. Engel & Völkers Commercial will gladly support you. You can get started by browsing our selection of commercial property insights for advice and inspiration.