Commercial Property Investors

Booming property market trends and historically low interest rates over the past decade made investing in commercial property the shrewd investment option for serious investors; however, since the first quarter of 2008, commercial lending in Ireland (for Irish projects) has ground to a halt. This is frustrating speculative investors who cannot secure financing for the high-yielding opportunities that only exist in a slump market.
In the past, novice investors have been deterred from entering this arena due to high entry costs and lack of knowledge. With high value investors taken out of the market for at least 2 years (2008 & 2009), there is little competition for buyers. This is creating a unique opportunity for small/medium sized business owners who are current renting but in a position to purchase commercial premises (in their personal capacity, generally via a pension mortgage for maximum tax efficiency). In consultation with your financial advisor/portfolio manager, Buyers Broker Ltd. can source your ideal commercial investment property.

As the Irish property market heads into recovery mode in 2010, the commercial sector is expected to lag behind residential. This will present opportunities for well-financed investors to take advantages of more accessible credit and pick up some great bargains. Commercial property offers investors a range of benefits, however, it is important to appreciate that investing in commercial property is different from investing in residential property. For example, tenants of residential property are typically committed to relatively short renewable leases, but commercial tenants sign long-term contracts with periods in excess of ten years; Tenants of commercial property are typically liable for repairing the property but landlords of residential property usually remain responsible for repairs; and financial returns to residential property generally result from increases in capital value, whereas a significant component of commercial property return arises from income.

Benefits of Commercial Investment:

1. Secure and stable cash flow - Commercial property income is relatively secure reflecting several important factors: the length of lease contracts; a low level of default amongst commercial property tenants.

2. Performance – Economists reports indicate that over the last decade, direct investment in commercial property has outperformed equities, gilts and cash deposits. Most investors will be painfully aware that all such investments have been badly affected in 2008/2009.

3. Low volatility - The return from direct commercial property investment has been much greater per unit of risk than other principal asset classes including equities.

4. Diversification - Property offers diversification benefits to multi-asset investors.