Why commercial property?
Compared to residential property investments, commercial property offers some key advantages:
Long-term secure cashflow — Commercial lets normally have long lease contracts, with periods of 10 years and more not being uncommon. In addition to this, commercial property tenants are less likely to default on payments and even if the tenant goes into liquidation, the liquidator may continue paying the rent in order to stop the lease being forfeited.
Maintenance — Commercial tenants are generally liable for the maintenance and upkeep of the property, contrasting with residential leasing, where the onus tends to be on the landlord.
Income yield — Commercial property tends to deliver a relatively high income yield throughout the rental period. In comparison residential property investors rely on the capital value of the house increasing to generate a good return. This is fine during periods of rising property prices, but less beneficial during property slumps.
Commercial property investments have also performed well in terms of growth and stability, compared to equities and gilts over recent years.
Commercial property for the personal investor
Few personal investors will have sufficient funds to invest directly in a commercial property, however there are opportunities for indirect investment.
For the small investor, only looking to invest a couple of thousand pounds, the choices are limited to a small number of unit trusts and life funds that invest in property or buying shares in property companies, such as British Land and Slough Estates (though these are often more linked to the equities market, rather than property market performance).
Larger investors have a greater range of options available, with a number of products offering a chance to invest in geared property investments through a limited partnership structure. Often these products will require a minimum investment in the region of
