Investing in commercial real estate has its own unique advantages compared to other investment options. To help you determine if this market is right for you, we've compiled the top benefits of this trend in one place. In particular, we will look at investing in commercial real estate in one of the most attractive regions for this - Barcelona, Spain.
- Investing in commercial real estate, especially with existing tenants, provides stable income. By investing once, the property owner receives regular profits every month. The main task of the owner is to monitor the situation and replace tenants if they stop paying on time under the contract. If necessary, these responsibilities can be transferred to specialized management companies that will resolve all emerging issues for a pre-agreed percentage of the profit.
- The return on investment in commercial real estate in foreign currency usually exceeds the return on foreign currency deposits in any bank. We are talking about Western hard currency banks where interest rates are either very low or negative. In Barcelona, with the right approach, you can achieve a profitability of about 4-5 percent per year after tax on commercial real estate. In addition, real estate itself is steadily becoming more expensive over time. If you choose the right moment to sell, you can make significant money on the difference between the purchase and sale prices, especially by avoiding sales during periods of crisis. In conditions where Russian banks not only do not offer normal interest rates, but also charge fees for storing currency, investments in foreign commercial real estate become especially profitable.
- Real estate is real property that can be seen and touched. Unlike virtual assets, any piece of real estate retains its value, regardless of world events. For example, premises for a grocery store will remain in demand even in extreme situations, since the need for food will always be relevant. Property will not disappear due to broker mistakes, and it is difficult for fraudsters to steal it, especially in countries with a reliable legal system. It will not lose its value instantly, as can happen with stocks, and will not cease to exist, as sometimes happens with banks. Therefore, we can confidently say that commercial real estate is a reliable asset that can be passed on to your descendants.
- The long-term nature of investing, which some may consider a disadvantage, is actually a significant advantage for serious investors. Professionals typically purchase commercial real estate with a tenure prospect of 7 years or more. This means you won't have to review your investment portfolio every six months, look for new opportunities, or wonder why previously profitable assets are now generating less income. You won't have to deal with ever-decreasing yields, as is often the case with bonds as they approach their maturity date. There is also no need to regularly renegotiate contracts with banks on new, usually less favorable terms. Commercial real estate investing works simply: you invest money and earn income until the time is right to sell the property. There is no need to set a maximum tenure period, since commercial real estate is not limited in time.
- The terms of the contract for the lease of commercial real estate can be freely determined by the parties to the transaction. The owner can include in the contract any provisions that he deems necessary if the tenant agrees to them. Everything is regulated by the market. Unlike the securities market, where everything is strictly controlled by law, there is no excessive standardization and regulation. Commercial real estate also has advantages over residential real estate, which is often purchased for rental purposes. It is not easy to evict a private person and his family even if the terms of the contract are violated or property is damaged, especially in Spain, where a court decision is required. Additionally, in Spain and many other countries, the law limits the frequency and size of residential rent increases, protecting private tenants. While commercial tenants enter into contracts on market terms, without such government protection, which allows commercial property owners more flexibility in managing their properties and income.
So why, despite all these advantages, do many still prefer to invest money in bank accounts or buy apartments and villas in Spain for periodic rental rather than in commercial real estate? Many of these properties sit empty most of the time, requiring additional costs from the owner.
The problem probably lies in the lack of specialists who can offer the right solution. It is for such tasks as helping private investors and family foundations that the consulting agency GG Barcelona Real Estate exists. Our experts are constantly updating our unique closed catalog with the most attractive commercial real estate properties for investors. To get acquainted with our offers, just leave a request through our form.
