Buying a commercial property is potentially one of the biggest investments that you will make. You may have already invested in your own home, but a commercial property is completely different.
Whether you’re an individual, or you’re part of a business, you will need to know as much as you can about commercial properties, and how they may fare in 2016.
Offices are the firm favourite
At the time of writing, offices are being taken over pretty quickly in major cities, including London. This is because offices are needed a lot more than they used to be, simply due to the fact that the world of IT is now a fast-paced and ever expanding one. There are also other reasons behind the need for offices too. Many UK companies who once had factories over here, are now moving their factories overseas, but leaving the administration side of things in this country. They have more money to expand the administration side of the business, as the wages they pay to those who work in factories overseas, are much lower.
But it’s not just the major cities that are profiting from the need for office space, there are places outside of cities that are benefiting too. Renting office space in the beautiful city of York, can be quite expensive, but if you were to move just a few miles out, then you could find the rent is much cheaper. If you were to own an office complex a few miles out of York, then it’s likely someone will ask to rent that property, very soon.
The buyers are changing
Just a few years ago it would have been thought quite novel if someone who lives overseas came to the UK and purchased a commercial property over here. Now times are a-changing, and more and more people are coming to this country, and investing their money here. At the time of writing, many people from China are continuing to invest their hard-earned cash in our economy, but this could soon change. The Chinese market has seen a bit of a slow-down, which means buyers from overseas may soon stop investing as much as they currently are. This could mean that those of us who live and work in the UK will have more choice, but it could also mean that there’s not as much money being put into our economy, which could spell trouble for us too.
What you need to look for
Look for a property that has real income potential. Rental rates are increasing at the time of writing, and this means that the market is good. Look for a property that is likely to be of some use to potential business: look for office space in a busy part of town, retail units in a bustling shopping mall, or a warehouse on an industrial estate.
You may also want to think about buying apartment buildings, or an industrial building that can be used as a factory, or an office. Look for properties in areas that are thriving, and where the rent is affordable, but enough so you can pay your mortgage.
How does it look?
When it comes to buying a commercial property, you will want to get information on how it looks. If you’re thinking of spending money on a warehouse, you don’t want it to look a little worse for wear, the same with any other building you buy, unless you want to tear it down and start again. A good way for you to please your neighbours, is to make the exterior of the building look similar to, or complement the surrounding buildings. Neighbours, particularly people who live in the area don’t want to see something bizarre go up, or have an office or retail building close by with lights that keep them awake at night. Sure, the building may be cheap, but it will be at a real cost to you, and potential customers.
The commercial property industry is an ever-growing one, and at the time of writing it’s likely that you could see an return of as much as 12% on any investment that you make. If you were to invest in a new home, you could see a 4% return if you’re lucky, which just goes to show you that there’s real potential for a nice bit of profit if you invest commercially.
If you’re serious about investing in a commercial property, then speak to an estate agent as soon as you can. Get onto the market while it’s good, and rent out the property at a rate that will not only pay off your mortgage, but keep your customers happy, and the money coming in. The commercial property market in 2016 is set to be a good one, and it’s up to you to make the most of it.