Commercial real estate investment is a field usually reserved for only the most experienced of investors, those managing huge funds, those who have worked in the field and have huge cash to invest themselves etc, but it needn't be this way. In fact it isn't. Anyone who invests in a pension fund or investment ISA is likely already investing in commercial real estate via some model or another.
Nevertheless the point is valid; most lay investors (sometimes known in the industry as retail investors) will often choose residential as the easiest route, because they are familiar with renting and buying houses and it makes them feel less uneasy than entering the different world of commercial real estate investing. However there are some advantages of choosing commercial real estate, the main one being increased versatility.
In a good commercial real estate investment strategy, private investors will very rarely be the ones buying properties, usually investments are made via companies offering real estate investment services. All the time large funds are out there buying up office buildings, factories, warehouses and malls, and we invest in the returns from these in a number of ways.
REITs, Funds, ISAs, SIPPs
That's right, commercial property investment is actually far easier than residential (in the form of buying property) because you can phone a pension fund, or walk into a high street bank and ask about investment ISAs or SIPPs and easily find a fund centred on commercial property that allows private investors to invest in via SIPPs or ISAs. Of course many of the funds are mixed; investing in commercial and residential property.
Investment funds will invest in real estate investment trusts (REITs) and vice versa. It is simply a case of choosing the right fund. It is actually quite fun, because the minimum investment can be as little as £25 per month, although they do say the more you invest the higher the returns. So, you can analyse property markets and choose a fund that invests in the kind of properties you would buy.
Stocks and Shares
REITs, along with a whole host of other property investment companies, commercial developers, asset management firms and even investment funds are listed on stock markets around the world. Thereby we can invest in commercial property simply by buying shares in any of these companies.
Quite often, especially in times of economic upheaval small commercial premises will come up for sale, single shop premises, studios and such like. These are often snapped up by investors and bring strong capital appreciation on recovery, as well as a good rental yield if the price and management are right.
As you can see the commercial sector offers a large range of vast and varied real estate investment opportunities, far more than just going and buying a property.
*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.