Commercial Property Investment: What You Need to Know

commercial propert investment tower blocks and skyline in london

Commercial property investment is an excellent way to spread or diversify risk in your portfolio. Investing in property is unlike investing in other essential asset classes such as cash, fixed income and equities, meaning that your property values will move freely of other assets and won’t typically be affected by stock market fluctuations. So, what essential things do you need to know about commercial property investment? 

Long-term or Short-term Investment? 

You’re going to want to consider whether you want your investment to be long-term or short-term. Overthinking short-term investment and not long-term has been known to be a common pitfall for investors. When creating a plan for your investment journey, you must consider any potential seasonal fluctuations and be informed about planning for the region. If proposals are in place for regeneration, what effects could this have on the plot you are contemplating. 

Be Prepared for Long Leases 

On average, the lease period for your typical London office is around 10-15 years long and eight years in other parts of the UK. Which is considerably longer than a buy-to-let landlord might anticipate for a residential property, which would commonly have a lease of six months to a year. 

Don’t Forget Liquidity 

Commercial property investments are much more illiquid than most other investments, so you can expect a commercial property to take much longer to sell. Most investment trusts and funds will expect you to pay an exit fee if you decide the returns no longer meet your needs. 

Where Should You Invest 

You might want to choose a commercial property investment in an area close to your home or work. You may even contemplate investing in a particular property because it is somewhere known to be a fundamental spot for a type of business that you’re familiar with, and you can estimate the approximate returns of your investment. 

If you prefer the idea of short-term commercial property investment, you might want to choose an area where the cost of living is lower. So you will be able to find commercial property at a more affordable price. 

No matter what you choose to do, remember that the location you choose to invest in is essential to success and can make or break your returns. So, make sure to check out the top 5 best areas to invest in property in the UK. 

 

Want to learn more about commercial property investments? 

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