Author: Remya Menon, Editor at Bayut.com
For those in the know, commercial real estate has been a preferred method of investment for some time. There are good reasons for this: commercial real estate can represent a very strong return on investment, as well as an extremely steady tenant base.
If you have not previously considered investing in commercial property, 2019 could be the time to do so, with a number of trends making this sector even stronger. Let’s take a look at the rise of the business real estate market in 2019.
Why Invest in Commercial Real Estate?
In general terms, property represents a strong investment option for a few reasons. Investing in property offers good, long term returns on investment. The value of property may fluctuate at times, but has been shown to consistently go up in the long term. Combine this with rental income which can be a significant part of the returns on investments and offset mortgage costs, and property investment represents a much stronger investment compared to putting your funds into savings accounts. Real estate is also a much more stable investment compared to investing in stocks and shares, which can be a highly risky investment.
Commercial real estate in particular is a lucrative and stable form of investment. Rental income on commercial properties is typically good as well as stable. Additionally, commercial tenants tend to be long-term, because businesses will set up a location and it is in their interest to remain there for as long as possible. Having a secure, long-term tenant is pretty much the best thing you can do as a real estate investor. Finally, commercial real estate is something of a scarce resource which is always in demand, which means property values are almost guaranteed to rise over time.
Current trends in 2019 commercial real estate market
Financial analysts tell us that the commercial real estate market is looking very strong in 2019, across all areas. This is strongly linked to the economy: the US is enjoying a period of continued economic growth which is predicted to continue, supporting growth across office, retail and industrial sectors. This in turn will mean growth in demand for commercial real estate in these areas: new and expanding businesses need premises to operate out of, after all!
Economists are predicting a rise in interest rates in 2019 and going forward. However, these are expected to be reflected in only gradual, moderate increases in long-term rates. This is good news for commercial real estate investors, as they will not suffer from interest rate increases on their loans. Another trend we can expect to see in 2019 is the increase in the number of “non-traditional assets”. These are new and different types of commercial properties, such as mixed-use properties and new business models.
On a global level, commercial real estate is strengthening in a number of international markets. In particular, Dubai, Panama City and parts of Mexico offer great opportunities for investors in 2019. Although investing in property overseas comes with its own challenges and should be approached carefully, some of the best investments with highest potential on returns can be found in international markets.
If you want to take this a step further, you may consider investing in commercial real estate overseas and setting up your own business there. Dubai is a great option for this, thanks to new laws allowing foreign nationals to set up their own business in the UAE even without a local partner. See this guide for more on how to start a business in Dubai.