Commercial premises are a great alternative to diversify the savings of any investor. On the other hand, the demand for rental housing is not as high as in previous years, since users once again prefer to invest in real estate by buying a flat instead of renting it. This fact favors commercial premises, since the profitability they offer with their acquisition and subsequent rental is higher than that of homes, with percentages ranging from 6% to more than 15%.
Remember that the profitability of this type of real estate investment comes from two sources such as sales and rentals.
Given the good health that this type of asset has enjoyed and the optimism of the experts for the end of 2022, where they predict that it will continue to be the best investment decision on the Costa Blanca, we offer you four essential reasons to invest in commercial premises:
1- Attractive returns. One of the reasons why professional and institutional investors land on this type of investment is, as we have mentioned, because of its attractive returns. Commercial premises generally have a higher return than housing and other types of assets. According to data from Idealista, the gross rental profitability of premises nationwide in 2018 is 9.3%, ahead of offices (8.4%), homes (7.4%) and garages (5 ,1%).
2- Continuous cash flows. The main characteristic of investments in commercial premises is that they distribute periodic benefits. These benefits come from the rental income of the property. The rental income is comparable to the coupon of a bond and manages to obtain periodic income and returns that are amortizing the initial investment.
3- Real asset that allows reducing risks. Like all real estate, it is within the category of tangible assets, they can be touched and felt. Financial assets generally behave differently from real assets. Therefore, the combinations of both in an investor's portfolio allow diversification. And therefore, they will normally reduce the overall risk of the investment portfolio.
4- Longer and more flexible rental contracts. These types of properties generally have rental income protected with longer-term contracts. This generates greater visibility and prediction in the generation of income, which translates into visibility of the future benefits of the project. Likewise, the legislation to operate these rentals is more flexible than that of residential rentals, this makes it possible to reconsider the exit strategy of the investment or sale of the property, giving the manager the possibility of taking advantage of rising markets.
Investment in commercial premises is presented as a real investment alternative for those seeking to have a balanced investment portfolio.
Commercial premises are a highly valued real estate investment product, where, depending on the area and its pedestrian traffic, excellent spaces can be found below the market price. And, if a reform is also carried out to improve or transform said property, an incredible revaluation can be obtained in its subsequent sale.
But, to reduce the risks and obtain a profitable real estate investment, it is advisable to bet on well-located premises in central points in the cities to guarantee the passage of a good flow of public and a good demand of those interested in buying and/or renting.