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Investing in commercial property is an option that many investors consider from time to time as a way to expand their asset portfolios. Commercial property options for investors usually include office spaces, retail spaces, standalone shops and
vacant plots.

Here are a few things to consider when purchasing a commercial property:

Location. Owning a retail space in certain commercial areas can net in higher rentals and their value also increases at a higher rate. Choose a commercial area where the value and demand of shop is high; shops located along main roads have more visibility, accessibility and are therefore better options. If possible, purchase a commercial property that is located in a specialised pocket such as a tailoring hub, computer market or a food street; demand for property there is usually higher.

Weigh your options carefully. Buying a retail space in a mall is a better option than a standalone shop, since retail spaces in malls offer facilities such as security, utilities and a higher number of customers. Similarly, the resale value and the rental yield of an office space are higher when compared to those of a retail space.

Renovating and reselling. Retail spaces and standalone shops that are sold as empty spaces (without any renovation work or fittings) are slightly cheaper than those which have been customised according to the kind of business they were being used for. Therefore, a good option to consider is purchasing an empty space, renovating it, and then selling it for a higher price or renting it out at a higher rate.

Vacant plots. Purchasing a vacant commercial plot in an area that is being developed usually proves to be a lucrative option in the long run because its value and demand increases faster than that of a built-up property.

– Shahzad Ghaffar
The writer is Market Risk Analyst at JS Bank.   

First Published in the Real Estate Section of The DAWN National Weekend Advertiser on July 7, 2013.