Many people are fearful of investing their hard earned money and it is true, some would rather have the safety net of keeping their funds in a bank account. By doing this, the worry of seeing the value of your capital falling sharply is removed. However, in the long term, failing to invest your money could cost you.
Before the recession, property was a favourite for investors, but after the property crash investors have become tentative about taking steps into the property market.
This is precisely the reason why you should consider investing in commercial property. Due to the lack of demand, property prices have slumped and there are some real bargains available, especially in the commercial property market.
There are three different ways to invest in commercial property: You can either, directly purchase office space; invest in a real estate fund focused on commercial property; or perhaps the simplest option, is to invest in shares of a commercial property developer.
Directly buying office space is the option with the most risk, but which also offers the greatest potential gains.
When buying office space there are a plethora of factors to be considered. Ramesh Nair, Managing Director, Jones Lang LaSalle India, writes: ‘ Despite the availability of more rationally priced options, investing in commercial real estate is most definitely not child’s play. It requires forethought, research and planning…Investors need to establish the soundness of the location and its demand/supply dynamics. If they do not engage in sufficient research, they may end up buying into micro markets which have or will have high vacancies….They need to ensure that the economy, job market and population growth in the market is healthy….They need to check the developer credentials, potential for infrastructure development, access to public transport and quality of property management in the project.’
So, investing in commercial property has the potential to offer excellent gains, but an investor must be meticulous in their research and build up a knowledge of the area and the commercial property market in that area.
