The possible profits from investing in space for retail and services can in many cases be twice as high as the profitability of rental apartment, reaching no more than 5% profit per year. If you invest the capital in commercial real properties in the right way, you can expect a double return.
INVESTING IN COMMERCIAL PROPERTIES CAN BRING TWICE AS MUCH INCOME AS RENTAL APARTMENTS
The rising prices of residential apartments and the slowdown in the rental market both encourage to look for alternative ways of investing capital in real properties, which today are the most reliable types of deposits. The ones that can bring greater and more certain profit.
The possible profits from investing in space for retail and services can in many cases be twice as high as the profitability of rental apartment, reaching no more than 5% profit per year. If you invest the capital in commercial real properties in the right way, you can expect a double return. Such an investment can now give a return of even 8-9 percent per annum, while the capital expenditure to spent will be fully paid back after 11 years. And I do not only refer to participation in larger projects where several or several dozen millions are involved, but also to investing couple hundred thousand zlotys in the ownership of retail parks and local galleries, or to the purchase of commercial and service premises placed in attractive locations.
THE PREMISES WITH A CHAIN STORE LESSEE
Both companies and individual investors, with spare capital to buy a residential premise, do invest in commercial real properties, despite the fact that to enter the commercial premises market you generally have to spent more than on other premises. A good choice is both to buy a property located on an attractive trade route and one that is located in the vicinity of new housing estates, concentrating a large number of residents. The best option is to choose an area that can be commercialized into an outlet of one of the global retail chains, trading in foodstuff, medicine, or beauty supply products. A long-term lessee means a stable and predictable profit even for the next several years.
What is more, often the corporate lessee develops the commercial premises at its own expense, to adapt it to its needs. As a consequence, the expenses related to the adaptation of the property are lower. Moreover, the residential premises are usually rented for a period of one year. Changing the lessee often brings expenses, like the refurbishing of the premises or the replacement of equipment. Also, in case of residential apartments, it is particularly difficult to maintain the continuity of lease, and in result, the high level of investment profitability. – The fact that the local shops and service outlets as well as intimate retail parks near the place of residence are becoming more and more important, unlike the not so long ago popular large-scale facilities, seem to be a big argument in favour of investing in commercial real properties.
THE PREMISES WITH A CHAIN STORE LESSEE: HEBE
THE ANALYSIS OF INVESTMENT POTENTIAL
Before you purchase a commercial property, you should perform an in-depth analysis of the attractiveness of the property and its business potential. It is especially advisable to take into account the expansion plan of the surrounding infrastructure, plans for the development of the plots in vicinity of the target property, as well as the possible changes of the communication routes, both for pedestrians and vehicles.
The analysis of the competition in the area may help you avoid surprises, such as fresh supply of premises with similar parameters in the immediate vicinity. The calculation should include factors that show in what direction will the surrounding area develop in the next few or several years.
PRICES COMPARABLE WITH RESIDENTIAL PROPERTIES
The prices of commercial space vary, depending on the city and location. In the largest cities, they start at 5,000 PLN net per m2, and the smallest premises have an area of about 20 m2 while their price starts at 100.000 PLN net.
According to the data collected by LBC Invest, in Gdańsk, Poznań or Wrocław, the prices of commercial premises start at 6,000 PLN per m2 and reach several thousand zlotys in luxurious projects.
In Warsaw, the price of the premises in new housing investments, calculated as per m2, is similar to the prices of residential apartments. Depending on the district, they cost from 7.000 – 8.000 PLN net per m2 in Warsaw’s Tarchomin or Ursus, from 9,000 PLN per m2 in Praga. In central locations, the prices start from approximately 12,000 PLN m2. In Śródmieście, the rates start from 15,000 PLN per meter.
Author: Agata Karolina Lasota, CEO LBC Invest
We would like to encourage you to familiarize with our off-market offer for commercial premises. We offer premises with chain store lessees, such as Rossman, Media Expert, ALDI, Biedronka, Stokrotka, Lidl, Carrefour, throughout the whole Poland – in large agglomerations such as Warsaw, Cracow, Poznań, Wrocław, Tricity and many other attractive locations.
