The commercial real estate market has seen significant growth in recent years.
Data show that the market is projected to reach $4.13 trillion in 2024. And with annual growth of 1.54%, it is expected to reach $4.39 trillion by 2028.
For investors, taking advantage of commercial property investments can lead to a long-term, stable income and capital appreciation, as well as provide several other benefits.
In this article, we will explore commercial property investments, looking at the benefits and other key information.
What Are Commercial Properties?
Unlike residential properties, commercial properties are buildings used for business activities. They typically include a range of property types, such as office space, retail units and industrial properties.
Like residential real estate, a commercial property investor can earn a return on their investment through rental income and the long-term growth of the property value.
Holborn Property Investments offers industrial units in Yeovil with a gross yield of 6.1%. This demonstrates the potential of commercial buildings and how they can be a great addition to an investment portfolio.
The benefits of commercial property investments
Commercial property investments offer a wide range of benefits, as outlined below.
Rental Income
One of the primary benefits of owning commercial property is the potential for rental income.
Locations like Yeovil, a bustling market town in Somerset, attract businesses and tenants looking for commercial space.
By leasing out your property, you can generate a steady, regular income, which can provide a reliable source of cash flow.
Capital Appreciation
Yeovil has strong capital growth potential, meaning its market value may increase over time. This increase in value is one of the main determining factors when it comes to calculating your total return on investment (ROI).
Commercial property values can rise as the demand for the space grows and the local economy thrives. This allows you to sell the property at a higher price in the future, earning a profit.
Diversification
Commercial property investments in Yeovil can serve as a diversification strategy for your investment portfolio.
It offers an alternative asset class that has the potential to perform independently from traditional investments such as stocks and bonds. Diversifying your portfolio can spread risk and potentially enhance overall returns.
Long-term Stability
Commercial leases are typically longer in duration compared to the average lease of residential properties.
This provides greater stability for commercial property landlords and reduces the risk of frequent tenant turnover. Long-term leases with reputable tenants can ensure a steady income from rent and minimise vacancies.
Tax Benefits
Owning commercial property in the UK may provide certain tax advantages.
Commercial property can be held in private pension plans such as SIPPs in the UK and QROPS in many overseas territories. Deductions can be claimed for expenses such as:
- Property maintenance costs
- Repairs
- Property management company costs
Additionally, interest on mortgage repayments and depreciation allowances may be eligible for tax relief, reducing your overall tax liability.
Control and Flexibility
Investing in commercial property can provide greater over the management and operation of the property.
This allows you to make decisions on rental rates, lease agreement terms, property improvements and overall strategy. Such control can provide flexibility in adapting to market conditions and maximising investment returns.
Many leases also allow the tenant to maintain and insure the property and pay the service charges, keeping ownership costs in check.
Inflation Hedge
Commercial property ownership can serve as a potential hedge against inflation.
Rental income has the potential to increase over time. This allows you to adjust lease rates to keep pace with inflation. Additionally, property value may appreciate in periods of inflation, preserving your wealth.
Looking at the financial investment advantages of owning commercial property, it is essential to fully understand your individual circumstances. This is why we recommend seeking professional advice.
Before investing in commercial property, we recommend seeking professional advice. It is essential to fully understand your individual circumstances. This information is often collated through a fact-find, which will be facilitated through your financial adviser.
Commercial property investments with Holborn
Commercial property is widely overlooked in the UK private investment market. Instead, real estate investors often turn their attention to residential property investments.
However, the commercial property sector offers a number of advantages and strong potential returns.
To view our commercial property for sale, visit our commercial property investments page. Here, you will find key information, such as the gross yield and a detailed breakdown of the development.
Holborn Property Investments is a part of the wider Holborn Assets Group, an international, award-winning financial services company.
We work with some of the most well-renowned UK and international property developers to offer clients an exclusive range of off-plan and completed developments.
For more information, contact our team to learn how we can help you secure the right property to meet your investment goals.