Investing in commercial property and mainly in office, retail, apartment and warehouse property is called as the commercial investment .
Locating highly profitable property investments requires a preliminary analysis of a set of major metropolitan commercial property markets in order to identify the commercial investment opportunities that will provide the highest profits at minimum investment risk.
This can be achieved when the value of a commercial property increases considerably after its purchase. The faster increase in property value takes place, the greater the investment profit.
Therefore, the most profitable investment opportunities are represented by commercial properties that are about to experience the greatest increases in value. Hence, the key to successful commercial property investing is identifying commercial properties with very strong value-increase potential.
The value of a commercial real estate investment is determined in the property market by its income-earning capacity and the prevailing market capitalization rates.
Within this framework, the commercial properties that have the greatest value increase potential are those that have the strongest potential for the largest increases in the rental income they command.
The rental rate that can be achieved by a commercial property depends on market rents and the characteristics of the property (including its location). Generally, for well-located and managed commercial properties, increases in market rents pass on property rents as well.
Based on this analysis, it can be strongly argued that the first step for highly profitable commercial real estate investment is the identification of metropolitan areas with high likelihood of strong increases in market rents for commercial property.
These are the commercial property markets with relatively low vacancy rate, and strong demand growth rates that outpace considerably supply growth, that is, the rate by which the existing commercial property inventory in the market increases. An example, of such a case would be a metropolitan office market with 5-6% vacancy rate at the most, office employment growth of 4% and office space supply growth of 2%.
Locating highly profitable property investments requires a preliminary analysis of a set of major metropolitan commercial property markets in order to identify the commercial investment opportunities that will provide the highest profits at minimum investment risk.
This can be achieved when the value of a commercial property increases considerably after its purchase. The faster increase in property value takes place, the greater the investment profit.
Therefore, the most profitable investment opportunities are represented by commercial properties that are about to experience the greatest increases in value. Hence, the key to successful commercial property investing is identifying commercial properties with very strong value-increase potential.
The value of a commercial real estate investment is determined in the property market by its income-earning capacity and the prevailing market capitalization rates.
Within this framework, the commercial properties that have the greatest value increase potential are those that have the strongest potential for the largest increases in the rental income they command.
The rental rate that can be achieved by a commercial property depends on market rents and the characteristics of the property (including its location). Generally, for well-located and managed commercial properties, increases in market rents pass on property rents as well.
Based on this analysis, it can be strongly argued that the first step for highly profitable commercial real estate investment is the identification of metropolitan areas with high likelihood of strong increases in market rents for commercial property.
These are the commercial property markets with relatively low vacancy rate, and strong demand growth rates that outpace considerably supply growth, that is, the rate by which the existing commercial property inventory in the market increases. An example, of such a case would be a metropolitan office market with 5-6% vacancy rate at the most, office employment growth of 4% and office space supply growth of 2%.
No comments:
Post a Comment