Investing in the real estate market requires a thorough approach. It is necessary to take into account the time after which the object will start making a profit. Experts have calculated that the average return on commercial real estate is from 7 to 10 years, and the liquidity of a studio apartment is about 8.5 years, provided it is rented out.
Return on commercial property: is it profitable to invest in the market?
Real estate market experts conducted a large-scale research to understand how quickly investments will be recouped and whether it makes sense to invest in this segment.
Last year was a record year for commercial real estate transactions. The volume of capital injections here increased by 4% and amounted to 733 billion dollars, which is the maximum index for 10 years.
The most popular objects were those in London, New York and Paris. Despite the fact that Ukrainian cities are not in great demand in the world market, the segment is actively developing. The country’s commercial real estate is experiencing a sharp increase in demand. Vacant areas are shrinking, and rental rates are growing along with them. Moreover, both domestic consumers and foreign investors are interested in retail and office facilities. According to experts, many foreign businessmen have paid attention to the Ukrainian market due to the reduction of available space in Europe. If the trend continues, we should expect an increase in rental cost not only for retail space, but also for office and warehouse space.
The rate of return on real estate is influenced by the type of the object, its size, location and liquidity. On average the index varies from 7 to 10 years, with an annual return of 12-15%.
Popularity in the segment of residential real estate does not decrease. Prices for apartments in the capital start from 16 800 UAH per square meter, but everything depends on the district.
If you purchase a one-room apartment for 38 thousand dollars and rent it out for 10 thousand hryvnias per month, such investment will pay off in 8,5 years. One more variant of receiving income is to buy an object in order to sell it in time for a higher price.
When choosing an option for investment, it is worth first of all to decide whether it will be a new or secondary market. Most often, in order to receive income, they choose new housing. But here are also their risks: delaying the commissioning, freezing of construction. Therefore, before deciding to invest, you should study the developer and the conditions it offers. It is better to wait for the house to be put into operation.
It should be understood that the payback periods of commercial and residential real estate are relative. They may vary depending on the market and the situation in the country as a whole.