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Which is the best Property Investment: Commercial or Residential???


Property Investment in current scenario is always a lucrative investment option. NIRs always like to have a place back in India, even in down market condition, they used to park their earnings in properties.

Investing in property is always a safest and easiest way to make good return on investment rather than other options like share, bonds, stock etc.

Property deal can be the best with huge return on investment, if you are conscious about type of property to invest, whether its residential or commercial. There are so many types of properties available in market with different cost, usage, risk and growth.

So, this blog will help you to get secured from risk involved in commercial and residential property investment.

Difference between Commercial and Residential property:-

Commercial property is a property which buys to use it to generate income for example, Office space, industrial space, shop, showrooms etc. On the other hand, Residential property is a primary residence of buyer, for example apartments, house, villa, row house, etc.

Commercial property is more lucrative rather than residential. Commercial property has a steady returns and better cash flow as compared to residential.

However, both properties have some pros and cons to get best return on investment. Lets have a look on the points which can help you to find best type of property investment.

Cost of property:-

Basically, Commercial properties are so far more expensive than residential. The main reason is, most of time, commercial properties are located in centralized area of city and because of this reason, the rates of commercial properties are higher as compared to Residential.

If you consider Industrial property on outs tricks of city are also often expensive due to it’s size or area. Generally, area of industrial land is much bigger than any other type of property.But the appreciation rate of the commercial properties is much higher than residential due to it’s usage.Mostly commercial properties are to be use for business purpose or money making purpose.

Scope/ Appreciation:-

If you consider a property purely for an investment purpose, most of investors are unaware about investment into commercial properties and its’ returns on investments. Mostly, investors feels safe to park their amount in residential properties due to its low risk, but investing into residential properties is often gives lower returns as compared to commercial properties.

Biggest advantage of commercial property investment is attractive leasing rates. It can creates a big margin of your monthly cash flow. Commercial properties also benefits from comparably longer lease contracts with its tenants than residential real estate, indirectly owner of commercial property make real money from the increase in the value of the property by renting it out for eight to ten years.

Valuation of property:-

Valuation of residential properties can be done by analysing the value of similar properties in that particular area or it can be done through sales comparison approach based off other similar residential properties. Process of valuation of residential is easy as compared to commercial properties.

On other hand, value commercial properties can not be determined through a similar properties as comparison approach. Because of low competition, its really hard to find similar commercial property that sold recently.

Market Stability:-

In Market, residential properties are more stable in down market rather than commercial. As we know, everybody need a home at any time, rather than commercial or office space. Residential property investment are most safest option than any other type of property. Its always shows a upward graph even in condition of down market, in period of recession. It has a continuous demand in every situation of market which creates a pool of larger number of buyers.

At a conclusion, both residential and commercial property investment have some pros and cons. However, It all depends on the ability of investors to taking a risk.

Residential property gives you lower risk and lower returns and in case of commercial, it gives a higher risk with best returns on investments.


Category : Flatons Advisors Blog &Guest Blogger &Uncategorized



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