Investing in commercial property can result in higher returns than many other investment strategies. Schroders Global Investor Study asked experienced investors what returns they expect from a variety of investment strategies. A stock market ISA is expected to return 5% a year, and bonds 4.5%.
Commercial property returns are 5.2%, slightly behind the leading investment of mixed assets at 5.3%. Mixed investments are when money is investing in a range of stocks. Diversification smooths out the ups and downs from individual investments.
One of the worst forms of investment is a variable rate cash ISA which achieved only 0.9% return over the last five years.
Financial advisers always caution their clients that past performance is no guarantee of future performance. It is possible for the value of commercial property to go down and rent levels to level out rather than rising. It takes expertise to find the best locations and property types that are in high demand. The investment experts looking ahead are confident that 5.2% returns are achievable for at least the next ten years.
It is possible to find higher returns on commercial property. Knight Frank’s key statistics show that average yields for office space in Aberdeen are 6.5%, Newcastle 6%, Sheffield 6% and Cardiff 5.75.
Commercial mortgages are available to purchase commercial property for investors who want to diversify their investment portfolios by buying commercial property for the first time, or for investors who want to increase their commercial property portfolio.