The benefits of Commercial property offers the prospect of a reliable income. investing in Over the long term, this is likely to make up most of the total return you may achieve. commercial You may also get some capital growth, as properties can rise in value. However, they may property also fall in value. The potential for income The potential for capital growth The main source of return from commercial property Commercial property also has the potential for capital investment is normally the rent paid by the tenants – growth, meaning that if the property were to be sold, over the long term, this is likely to make up most of the the investor may receive more than the purchase price. total returns you may achieve. Of course, the investor may receive less if the price were to fall. Rental payments are made on a regular basis as set out in the lease agreement, just as they are when people rent A feature of commercial property is that its value tends residential properties. However, commercial property to be largely based on the reliability of the regular has two big advantages over residential property. The rental income rather than the emotional decisions that leases tend to last much longer and there is usually a can sometimes affect stockmarkets. This is one of the better chance of the rent being paid, as businesses are reasons that the performance of commercial property generally more reliable tenants, with access to larger is normally less volatile than some other types of sums of money. investment. Leases on commercial property can be for five or ten years – sometimes even longer – which means a commercial property investment offers the scope for a predictable, regular income that lasts the life of the lease. What’s more, rental rates are normally reviewed every five years and, in many cases, the rent can only be revised upwards. 4