Investing In Commercial Property

Commercial property for the personal investor

Few personal investors will have sufficient funds to invest directly in a commercial property, however there are opportunities for indirect investment.

For the small investor, only looking to invest a couple of thousand pounds, the choices are limited to a small number of unit trusts and life funds that invest in property or buying shares in property companies, such as British Land and Slough Estates (though these are often more linked to the equities market, rather than property market performance).

Larger investors have a greater range of options available, with a number of products offering a chance to invest in geared property investments through a limited partnership structure. Often these products will require a minimum investment in the region of £25,000 to £50,000, which is invested in a single property.

A few investors will be able to buy a complete property directly, however the cost of the property is likely to be 10 or 20 times the size of a residential buy-to-let, making direct investment prohibitive to most.

Commercial property risks

In line with all investments, commercial property investment comes with its own risks:

Poor liquidity -- Compared to equities and bonds, property has poor liquidity, both in the time spent finding a buyer and making the transaction. This can be further emphasised in poor market conditions when the ability to find a buyer offering the right price will become very difficult.

An alternative to using an estate agent to sell your property

A small minority of people administer to sell their house confidentially by doing their own advertising and putting up their own For Sale board, but as their property does not emerge in the Estate Agent's press adverts or websites, this is very much a hit and miss concern.

Even when a sale is protected, the legal organization in England & Wales means that until contracts are exchanged – classically many weeks later – the sale can fall through. In fact one in three settled sales do not complete, connotation that the sale process has to start all over again.

For anyone relocating or emigrating this is exasperating and irritating as plans have to be put on hold. For people with financial difficulties or in danger of having their house repossessed, it can be very serious indeed.

A realistic choice to Estate Agents

At last there is an alternative to using an Estate Agent. Using a professional property-buying company offers the speed and certainty lacking if selling on the open market through an Estate Agent.