Commercial property accounts for 13 per cent of the value of all buildings across the UK and is worth around £900 billion, according to industry sources.
But according to the RICS’ latest Commercial Property Survey, five successive quarters of growth came to an end between July and September, with demand falling to a net balance of -10 per cent, down from +17 per cent in the second quarter.
A short-term dip, however, could be a long-term opportunity to acquire a commercial property at the right price.
Commercial property covers several areas, from office space and high street shops to large out-of-town complexes and industrial units.
Investment can involve the purchase of premises, or investing in stocks, shares and bonds of companies that specialise in property.
What are the advantages?
Initially costly to buy, and then attracting other expenses like refurbishment and conversion, the returns and profits will be good where demand for well-designed, quality office accommodation is high.
Rental income might be generated each month, quarter, or on any basis agreed upon between the landlord and tenant.
As an investment, a steady income from a long-term lease is often less risky than an investment in shares.
Increasing value of investment
While generating income, the value of the property will almost certainly increase over the years, which will ultimately lead to a substantial return on your initial investment should you come to sell the property.
A secure, professional relationship
As a business-to-business partnership, you are normally dealing with professional tenants, so there are likely to be fewer disputes and better recourse should a dispute arise.
Contracts give legal protection
Most commercial property lease agreements are bespoke and are usually agreed over leases of between three and 20 years.
Commercial landlords typically have more protection under the law if the tenant fails to pay rent on time, or if they break any other contractual obligations.
Cheaper maintenance costs
Depending on the terms of the lease, tenants may be responsible for maintenance within the building although actual repairs to the property are the landlord’s responsibility.
Need help buying a commercial property? Contact our team today.
Director - Head of Commercial Department
I qualified as a Solicitor having completed my training with Mander Hadley in 1992 and am a member of the Law Society Property Section and The Warwickshire Law Society.
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