Why Investment in Commercial Property?

Published On November 27, 2017 | By David Standridge | Featured

Commercial property

It is a property in which the investment is done for commercial purpose like real estate investment and income property. It can be land or building that is purchased, sold or rented to generate profit in form of capital gain and rental income. Different types of commercial properties are industrial property, office property/building, hotels, hospitals, travel homes, warehouses and garage.

Commercial property investment is best for confident investors who are ready to work hard and take risk to get better returns and investment in commercial property provides best and consistent returns to its investors. To decide to invest in commercial property needs sufficient financial capacity, expertise, patience and good knowledge about investment industry.

Why commercial investment?

There are various reasons that attract investor to invest in commercial property, such as:

  • Investment in commercial property ensures security and long term returns to the investors. It also gives long term capital gain.
  • Most of the big investors who invest in private and corporate investments also invest in commercial property to diversify their investment portfolio.
  • The rental income generated on commercial properties is normally greater than the residential properties and it is much easier to get returns on it, thus it attracts lots of investors towards it. The annual return generated on commercial properties is approx. 6% where as annual return generated on residential properties is around 2-3%.
  • The commercial properties have comparatively more substantial depreciation than residential properties and it is also tax operative.
  • Leveraging a commercial property gives capability to leverage an asset and is also an effective strategy.
  • The increase in the rental percentage is higher in commercial properties along with the capital growth.

Apart from all of the above, the valuation of the commercial property is much more than residential property and gives good returns to the investors.

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