Commercial properties refer to retail buildings, warehouses, office buildings, industrial buildings etc. Investing in a commercial property is always a good investment opportunity for the innumerable benefits it provides. When it comes to money, investing in commercial property offers more beneficial rewards in comparison to residential properties.
Pros of investing in a commercial property
- Higher Rental Yields – One of the biggest plus points of investing in a commercial property is that the average yield of commercial property is in two digits. I.e. 10%. The amount of rental yield also depends on the type of property like shops, office spaces etc. It works as a good parameter to find out whether you are investing in the right location and at the right price or not. A premium good location helps you to fetch a rental yield of 13% to 15%.
- Consistent and Regular Returns – The lease agreement of a commercial property is for the long term. Normally lease is signed for 5 years and lease agreements carry a clause of annual increase irrespective of market conditions. Returns from commercial property investment are assured and beneficial in the long run.
- Tenants – Mostly Corporates, Banks, business houses are tenants. If the location is good you can deal with corporates easily and will not have to run to get better rents and all other operational hassles will be less. Moreover, a satisfied tenant will attract and bring more customers in the vicinity. It is a bonus for better future yields.
- Furnishing cost – One of the key advantages of investing in a commercial property is nil furnishing cost. The raw unit can be easily handed over to the tenant. Later, the corporates, banks, business houses and retail chains furnish the property as per their requirement. In case, of residential properties basic home furnishing adds to the cost of the property.
- Public Eye – Retail tenants have to maintain their store and storefront to attract customers. As a result, commercial property is also benefitted. This, in turn, helps to maintain and improve the quality of the property and increases the value of the investment as well.
- Limited hours of Operation – Businesses usually have fixed hours of working. There are fewer hassles in comparison to residential properties.
Cons of investing in a commercial property
The small downside of investing in commercial properties is that the fortune of the commercial property investment is linked to the performance of the economy. A weakening of the economy can reduce the demand for commercial property. The location and nature of the business is an important criterion. Any wrong decision can prove detrimental to commercial property investment.
ESSPEE Group with its 30 years of experience in real estate has the knowledge and experience to deliver the best property in Vadodara. It works with the motto of Innovation, excellence and commitment to deliver the best commercial properties to its customers.