Investors need a good range of financial risk in the portfolio so that any fluctuations in one form of investment are off-set by others. Professional investment houses with good track-records in spreading risk, like AnaCap, know this and private investors should, too. Even if you have never considered commercial property as an investment option before, then it might be time to reconsider, particularly if your other investments are tied up in other areas of the economy, like commodities or share options. Of course, researching a commercial property investment does not mean you have to go for it, but the exercise is a good one for focusing your mind in spreading risk into a wider portfolio of investment – just like the pros at AnaCap would do it.
Most investors consider that commercial property is an important asset class which allows them to diversify the risk in their investment portfolio. However, this is not the only reason of checking it out. Buying a house as an investment not only affords a good degree financial security over the middle and longer term, but it can put a roof over your head whilst doing so. Houses it should be said, when they are rented out, constitute commercial properties. If you already have somewhere to live, and finding a home is not an issue, commercial property investment still makes sense. This is because property prices in the UK have risen steadily for half a century and many people have made an awful lot of money from investing in property. Okay, so there have been downturns, too, and investing in property is not without risk. Nevertheless, if property investment is part of a wider portfolio, then these risks should be mitigated, at least.
Investors should remember that property is not directly linked to other common assets such as equities, fixed assets, like bonds, or even cash. This means that property values tend to move independently from other parts of the economy and they are not – generally speaking – affected by the goings-on of the stock market.
Many commercial property investors opt for direct investment in property. This means buying a property, perhaps solely or perhaps with an investment partner or partners. As the value of the property rises, so does the investment’s potential return. As the property can be rented out as a home or as a business premises it also has added income value for the investor. Many commercial property investors use their rental income to pay off mortgage fees whilst the value of the property is left to – hopefully – go up.
However, investing in commercial property does not mean you have to buy a property outright. An increasingly common way to invest in commercial property is via a collective investment scheme. These are often referred to as unit trusts or investment trusts. These schemes allow investors to put money directly into a portfolio of commercial properties which would otherwise not be options for smaller investors. Typically, unit trust investments go into commercial properties like supermarkets, distribution centres, retail shopping malls or office blocks.