Details content

Commercial real estate – Benefits or risks? Notes when investing

Commercial real estate is a regular form of profitable real estate, built for leasing business. So what are the benefits and risks of this type of real estate investment? What are the notes investors need to pay attention to? Stay tuned for the following post!

Commercial real estate

Benefits of investing in commercial real estate

It can be profitable through business activities, so it is sought by many investors and considered as a saving asset, its value increases over time as well as is easy to sublease for a stable source of income. determined. When there is a need to resell, the liquidity of commercial real estate is also better than that of other products.

Investing in real estate can protect investors from inflation, depending on their ability to shift the pressure on rising costs from inflation to tenants by increasing rents. Construction costs also tend to increase with inflation, putting upward pressure on real estate values. Therefore, capital investment in real estate may not be subject to large inflation risk, depending on the increase or decrease in operating income and the value of the property relative to higher inflation. expected. In a real estate market where occupancy rates are real and rental rates are low, where investment in building new properties is not feasible, property values ​​may not increase with inflation.

Benefits of investing in commercial

What risks are encountered when investing in commercial real estate?

The long period of investment in building new real estate before completion tends to result in large fluctuations in property values ​​during construction as the situation in which the property is located can vary significantly from the original estimate. original ant.

Availability of real estate market information: In non-active real estate markets or underdeveloped real estate information databases like in Vietnam, sellers and buyers spend a lot of time. Time, effort, money, difficulty finding buyers, and finding the right property for your needs. This lack of information puts both the seller and the buyer at great risk in the purchase and sale transaction as both parties may agree to an unfavorable transaction price due to not knowing the exact market value. economics of real estate.

The lack of a database on the real estate market and the difficulty of accessing the information on planning from the Stateside create great barriers for determining the value of the real estate. Investors do not always have enough information and in-depth knowledge about the structure and features of real estate, which leads to ill-informed decisions that do not reflect the property’s real value. Investor’s real estate.

Management risks: Real estate asset management is a characteristic factor associated with real estate investment. It includes general business management and property maintenance. Management risk reflects the ability of managers to make sound business and operational decisions such as rental agreements, maintenance, property advertising, and renovations. if necessary.

Notes when investing in commercial real estate

Choosing the right type of commercial real estate for investment

There are many types of real estate that investors can choose from. Each type of real estate has its own set of challenges. Therefore, choose for yourself the type that you are familiar with and suitable for investment capital.

Understand the risks when investing in commercial real estate

It can be very profitable. However, it is not possible to invest without understanding the risks involved. Understand the risks that may be encountered in the investment process so that you can make the right decisions.

Notes when investing in commercial real estate

Assess the supply and demand of the project

The success of any  project is tied to supply and demand. Often, the local economy and employment situation will determine the success of a project there.

Therefore, investors need to pay attention to whether the presence of similar projects and the local economy will continue to create demand for commercial real estate.

Collaboration with experienced developers

Developers are always looking for funding and reliable partners for their projects. Therefore, look for an experienced developer and need to find a real partner. Work with local real estate professionals to find projects that interest you.

GPlease – A unit specializing in commercial real estate investment consulting

GPlease is a unit specializing in commercial real estate investment consulting. Besides, we always update the latest information on projects to provide investors with important information and the most suitable products.