Why Invest in Commercial Property? February 2021
Sentiment - Subdued market, with opportunities available
Valuation - Lower activity, lower prices, uncertainty in the market due to Covid-19 impact
What has traditionally stopped private investors, with modest budgets from investing in commercial real estate? It primarily comes down to the perceived high cost of entry, perceived risk, together with the common lack of understanding around the sector’s fundamentals, and concern over losing a tenant.
In reality, the benefits of owning well leased commercial property investments are clear; secure leases (3 – 5 years), high quality tenants, fixed annual rental increases, and net rental terms. This is where the tenants are responsible for the payment of the majority of outgoings, and importantly comparatively higher returns are on offer, sometimes 5% net or higher. Entry level investment is as low as $400,000.