Real estate investment in the commercial area

Posted by dealanddeals.pk on November 27th, 2021

Investopedia defines investing in commercial real estate as “ investment in the property that is used exclusively for business-related purposes or to provide a workspace rather than as a living space, which would instead constitute residential real estate”. In short, this property is dedicated to income-generating activities. 

Types of Commercial Real Estate Investment

There are 5-6 categories of real estate but broadly, real estate is divided into two categories, Residential and Commercial. Commercial real estate investment has further sub-categories including:

1. Buying commercial plots

2. Office buildings

3. Retail centers

4. Apartments

5. Industrial commercial investment

6. Hotel and resorts

7. Storage units

Buying commercial plots

This is the best type of commercial investment especially in developing countries like Pakistan. This investment simply involves buying raw land in commercial zones. Despite being raw land it can serve multiple investment purposes i.e. the buyer can hold it and resell it on profit when prices increase, lease it for cultivation if it is in a commercial area et cetera. 

If you have ample market knowledge, well and good but in contrasting case, it is always a wise option to take assistance from a real estate agency. 

Office Buildings

Office buildings are always in demand in urban and suburban areas. These buildings generate a continuous stream of cash flow for the investor in the form of monthly rent and lease payments.

Office buildings can be single-tenanted or multi-tenanted, depending upon the building size. 

Retail Centers

This investment is investing in buildings that usually host the retailers such as restaurants, grocery stores, shopping outlets. The retail investment sector is so vast and further divided into multiple sub-categories such as building plaza with retail spaces and shops to different tenants or purchasing one or two shops in a big building and using it or renting it out further et cetera. 

Apartments or Multifamily outlets

Like office buildings, these structures also bring in a steady stream of income. 

This type of commercial investment involves building multiple residential units in one building and renting them out to different parties. Apartments, condos, townhomes all are types of it.

Hotel and Resorts

This is one of the most expensive types of commercial real estate investment. This investment involves building the infrastructure where an establishment provides accommodation, meals, and akin services. The Hoteling sector is also very vast and involves sub-niches including on-site restaurants, full-service hotels, extended stay outlets, casinos et cetera. 

Investors should never jump into this type of commercial investment unless they are seasoned investors.

Storage Units

These are warehouses usually leased to businesses. This is a very good investment prospect because if leased to a corporation, the tenant not only pays lease but also maintenance & repairs cost, insurance, and property taxes. Besides either an urban setting or a small area, warehouses are usually in demand everywhere, so it is never difficult to find parties who are interested in renting them.