As we step into 2020, it’s worth taking a look at where things stand with the Commercial real estate market currently and where it is headed next and if you do have some time off for the holidays and if you’d like to use some of that time to brush up on best processes for success in the new year, then keep reading!
More consistency – Enhanced yield consistency – Out of all other forms of investments, commercial real estate investment values tend to be more consistent, even during market deterioration/fall.
Long leases – Leases in commercial properties can be negotiated over 3 to 5-year terms rather than small terms in residential properties and also can be extended when it falls due for renewal.
Advantageous even with inflation – As and when the prices of goods and services rise in the global or local economy, real estate often benefits. That’s because increasing wages/salaries and profits also means that the property owners can increase the charge for spaces, as well as what lessee can afford to rent.
Tax Knocked off – Commercial properties let you be your own lessee. This can provide a considerable range of tax deductions plus the benefits of security.
Zero Furnishing Cost – One of the leading advantages of CRE Investment is that furnishing cost is zero. You can hand over the raw property to the lessee. These raw units are then furnished by the tenants such as banks, retail chains, malls, etc by their own choice suiting their industry.
Better Yields – Throughout the past decade studies proved that financing in commercial properties has generated a steep positive curve in revenue and constant price uplift. This is one of the biggest plus points in CRE Investments. The average rental yield of commercial property is in two digits i.e. 10%. Depending upon the type of property like shop, office space, malls, etc. For premium or popular locations, you may get a rental yield of up to 13% to 15%
Supplementary diversification – As an asset category, CRE has a very different impact on stocks or bonds. To be more specific, Commercial Real Estate Investments have a historically low correlation with the stock market, which means your investment necessarily won’t get impacted even if there is a fall in global equity markets.
Rental evaluations mid-stream – Rental increases can be evaluated throughout the term of the lease in commercial properties, based upon inflation and market price movements.
Online direct investing – It is also referred to as “real estate crowdfunding” which allows you to choose individual CRE projects that fit with your financial goals and plan, along with other investors. This facility i.e.projects listed on online marketplaces generally makes it easier to find better and suitable projects, mainly outside your home city.
Triple net leases – You as the property owner do not have to pay any expenses on the property. The tenant pays all property expenses directly, including real estate taxes, building insurance and maintenance.