Is commercial property a viable investment?09.02.2017
Whenever you’re considering adding assets to your portfolio, having the viability of each investment in mind is an important step in ensuring lasting success. In a recent blog post, we talked about diversifying your investments. In the post-Brexit vote environment, diversification has become increasingly important, in property markets and elsewhere. In the property world, commercial investments have seen a considerable boom since the Leave vote, whereas other market sectors haven’t fared so well. Whether you’re investing in a warehouse, shop unit or office block, commercial property is just one way to do this, providing a means of spreading risk that’s separate from other financial assets, such as stocks and bonds.
Viability is a term that’s often used in conjunction with property investment, but, to new investors, the definition might be a little unclear. When talking about the viability of a property investment, you’re generally considering whether the property is going to bolster your portfolio, be a feasible long term investment (make you money through rents, for example, or go up in value as time goes on), as well as making sure that you’ll be able to use the property in a constructive way.
How to make sure commercial property investments are right for you
There are a number of factors that make commercial property a great asset. As we’ve already mentioned, investing in commercial property is an excellent way to spread risk across residential investments and other financial assets.
Commercial properties also tend to have longer leases with regular periods of rent review meaning you can be sure your investment is always up to date. Depending on the lease terms, a commercial property is far more likely to hold its investment value and generally commercial property doesn’t suffer from dramatic falls in property values. In the meantime, though, this high-yielding sector usually ensures a steady rental income to make the investment worthwhile.
Commercial property usually offers a greater degree of stability as it usually costs companies a lot more to move than residential tenants. That means commercial property investments see less turnover, less downtime, and a steadier rental stream.
For landlords looking for a more hands-off approach, commercial property is an excellent option. Whilst more due diligence is required in the buying process to ensure the property is suitable, once tenants are in place, maintenance and upkeep are usually their responsibility.
How to invest
Our number one tip is to buy local. This is especially relevant if you’ve already invested in other properties, be they residential or commercial. Buying local will allow you to compare market trends and prices far more easily, meaning that you can ensure you’re buying at market value. You’ll also already have some idea of the viability of the area if you’ve already invested and seen success. We have a number of great Sussex-based commercial opportunities up for auction at each of our events.
If you’d like more information on our range of commercial investment opportunities or are looking for advice on commercial leases, rent reviews, valuations or any other property issues, please don’t hesitate to get in touch with the Austin Gray Auction House Sussex team who will be more than happy to help.