Retail Property Investment As A Booming Trend in 2021
Despite the economic turmoil and drastic societal shifts brought about by the COVID-19 pandemic, the field of real estate remains to be a resilient industry. It is true that the unprecedented crisis has seriously hit the property-purchase activity in the first half of the year. In fact, the sales have dropped tremendously, leaving agents and owners with no choice but to update listings with softer prices.
While the downturn may sound terrifying, the real estate industry is still on a continuous positive momentum, which is mainly influenced by the underlying perception that there will always be a permanent demand for commercial and residential properties.
Generally, real estate properties are considered as one of the best forms of investment due to this asset’s inherent stability and its capacity to provide more value for money in the long run. These may not be as liquid as bond funds, savings accounts, or stocks, but properties are best known to deliver superior returns and portfolio diversification with lessened volatility. In this sense, aspiring real estate owners take advantage of the reduced prices due to the latest reports saying that 2021 will usher in a total real estate rebound.
Investing in The Right Type of Property
Property investment can be compared to oil, gold, and diamonds in the sense that it is increasingly scarce- driving its value to the maximum level. Despite high-prices, people are flocking to buy and own a piece of land because real estate is a sure-fire way to create a regular stream of income. However, investing in one is not as easy as it seems. You see, aspiring property owners should consider the different types of land assets and understand which one best fits their goals and business strategies.
Basically, there are five major property investments: residential, commercial, retail, industrial, and Real Estate Investment Trusts (or REITs).
For investors looking to establish apartments and houses that they can eventually flip, residential properties should be your target. On the flip side, commercial properties are perfect for owners planning to construct office spaces and buildings. Now, if you are interested in properties located in highly populated areas like malls or other commercial establishments, we highly suggest that you look for retail real estate instead. On the other hand, if you intend to create warehouses or distribution centers, we recommend that you sign up for industrial properties. Lastly, if you are interested in something that works like a dividend-paying stock without actually owning the property, investing in REITs is the best choice for you.
Retail Property Investment As A Booming Trend in 2021
The COVID-19 phenomenon has rapidly shaped the real estate industry. As different countries are lifting travel restrictions and quarantine rules, spaces like shopping centers, strip malls, and retail condominiums from Precondo are starting to reclaim large foot traffic. However, the economy is not yet expected to make a full come back in 2021, and this leads us to our first reason why you should invest in retail properties: The prices will be at their lowest.
Due to lockdown, many businesses have experienced significant losses and are in need of cash influx to continue operating. One solution for companies that own their premises is to do a leaseback: sell their commercial property and lease it back from the new owner continuing their business operation. This is a great opportunity for real estate investors to acquire a commercial property that already has tenants in place, among other benefits explained in this in-depth sale and leaseback guide.
According to PWC’s latest report, retail properties will face the largest decline in terms of prices in 2021. You can use this decline to your advantage by strategizing on two things: the property’s location and how safe it is. Given that public spaces were shut down during the height of the pandemic, you can expect that possible tenants today will look for retail areas that are big enough to provide social distancing markers, air filtration, and HVAC systems, outdoor spaces, and physical barriers. If your retail property can provide such, you can rest assured that your investment can return in the next two to three years.
The second reason why retail property investment will be popular is that once you sign in on a tenant, you can expect longer leases. Unlike residential properties, where the usual turnover is somewhere between six to twelve months, retail properties can expect tenants to stay for at least five years or more. In the upcoming year, you can be sure that your new occupant will spend money investing in their spaces by adding tailored fit shields, floor markings, signages, and cleaning equipment, which are all designed to only be used in your retail space.
The third reason why you should consider retail property investment is because you can easily experiment with your asset at any time. Depending on your country’s location and the zoning laws, you can easily convert your retail property into a residential one. For instance, if you find it hard to attract tenants after some time, you can simply convert your establishment into an apartment by consulting with your local government. In this sense, you can take advantage of this property’s unique flexibility that residential, industrial, or purely commercial properties cannot.
Take Advantage of The Opportunity Today!
Property investing is not for the faint-hearted. While it may look like an attractive proposition due to its fantastic return of investment, please note that it also has its pitfalls. If you deem that you are finally ready to invest in retail properties, we highly recommend that you do your research on the best locations and the business types that suit that area’s community. Whether you are new to the concept of property investing or a total pro in the field, you can take the bold decision today and reap the benefits as early as next year.