The Negatives on Commercial Property
When the economy is strong there is a generally a strong demand for commercial properties however when there’s an economic downturn, demand for commercial premises usually falls.
While commercial properties attract long-term leases, it can take longer to find a tenant. It’s not uncommon for commercial properties to have long vacancies, which means you will need to cover all the cost during this period.
Changes in supply conditions can create potential problems for investors. An increase in new property coming on the market in the same area creates a threat to existing tenancies as tenants may look to upgrade or expand. Strong supply can also reduce potential yields.
While major infrastructure changes in the area can attract commercial investments there, it can also lure tenants away from existing areas and older commercial premises. This could result in your property becoming vacant.
The value of commercial properties closely correlates with the lease on the property. If a commercial property becomes vacant, or the lease is about to expire, the value of the property would generally be expected to fall. In contrast, any price falls associated with residential properties are generally less dramatic and usually happen progressively over a longer period of time.
At Premium Lifestyle, the first part of our approach is to better understand your circumstances. Once we have an overall understanding of your financial situation, we will formulate a customized proposal to best meet your needs and goals.
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Any information in this website and the links provided are for general information only. It does not take into account your personal financial circumstances, needs and objectives. You should consider seeking specific advice in regards to your personal situation, from relevant licensed professionals, before proceeding with any strategy. Premium Holdings Pty Ltd is a licensed real estate company, specialising in property investment, with associations to independent legal, financial and taxation experts.