Investing in Commercial Property.

Investing in Commercial Property.
Investing in commercial property is a great way to invest
your money. There are many alternatives to investing in
commercial property which makes it good for every type of
investor to get involved.

So what are the options available for those interested in
commercial property?

Some of the options you may already know exist, lets look
at some,

Listed property trust is the simplest way to invest in
commercial property, all you have to do is open an account
with a stockbroker, deposit some money and then place an
order. Listed property trust can be found on the stock
-market, they invest in a wide range of commercial property
i.e main office buildings, shopping centres, as well as
industrial and leisure properties.

The trust manager chooses properties and is responsible for
the maintenance, renovation, and for collecting rentals.

Property securities are managed funds which invest in a
list of property trusts. This option is very good for
somebody who is unsure which trust is appropriate. Purchase
is through a prospectus.

Another simple way to invest is public property syndicates
, with application via a prospectus. The downfall is they
require a large minimum outlay and you are locked into the
investment for the duration of syndicate unless you can
find someone to buy the investment from you.

If you have research the market and have some acquired
knowledge then direct property investment could be for you.
You can also buy direct property through a private property
syndicate.

Mortgage funds are managed funds that lend money over
property. The investor will be offered security and returns
that are a little higher than a bank term deposit but there
are no capital gains.

Commercial property is thought of as office, retail and
industrial but as an investor you need to be aware of the
many options available to you. Health care, child care and
retirement properties are great examples, also parking lots
, storage facilities.

An article read "Americans regard self storage as an
absolute blue chip investment and is considered the safest
real estate based investment in the United States"

So when is the right time to invest in commercial property?

If you are a participant in the share market you would be
aware of the "investment clock", which its purpose is to
show how the economic cycle works.

An overheating economy is followed by higher interest rates
and falling share prices, when the economy declines so does
interest rates and shares begin to raise again.

Here is a guide to the way commercial property could fit
with the economy;

The economy starts to slow. Direct properties stop raising
and may even decline. The authorities inject liquidity into
the economy. The stock market and listed property trusts
rise. The economy begins to rise. Direct property begins to
rise Inflation may also rise and interest rates rise The
stock market and listed property trusts fall.

American research has identified four phases based on
economic and supply and demand.

Phase One is when the market is generally in a condition of
oversupply, due to a weak economy and too much construction
from when the economy was strong. This is the bottom of the
cycle.Vacancy rates will be high and rents would be
falling. During this period new construction will cease,
while demand slowly starts to grow again.

During phase two new spaces will continue to grow, there
will be very little construction and rents rise sometimes
sharply. This will cause developers once again initiating
the construction of new buildings until there is an
equilibrium between supply and demand.

In phase three demand continues to grow and supply grows
faster. Rental growth could slow down.

The final phase brings the market to a point of oversupply,
due to over - building, with the condition aggravated by
the economy weakening.

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