Commercial real estate refers to any property that is used for business purposes. This includes offices, retail spaces, warehouses, hotels, and industrial buildings. In Dubai, there are several business hubs where you can find a large number of commercial properties.

Commercial Real Estate is a broad industry that covers a lot of asset classes and property types. Many people are interested in knowing which commercial properties are the most profitable. Understanding the reasons why certain sectors perform higher than others can help support your success in an ever-fluctuating market. Here are some of the property types that perform well and the factors influencing their return.

Types of Profitable Commercial Real Estate Investments

Industrial Properties

Industrial Properties have strong and stable demand, especially with industries like manufacturing and e-commerce needing properties like warehouses to store and distribute their goods. Industrial users usually sign long leases–sometimes 5 or 10 years–and are typically servicing nearby businesses or large plants, so there is a lower chance of them leaving. This provides investors with steady income, and less day-to-day management is required. Also, many industrial leases are triple-net (NNN), which translates into near-zero ongoing expenses for the landlord. Managing industrial properties may be easier than other types, as tenants often take care of things themselves, but there is much more wear and tear on industrial buildings compared to other property types.

Shopping Centers

Shopping Centers are retail properties that can yield high returns, but depend on a few key factors to produce such results. Successful centers will generate high traffic and attract popular stores, thereby increasing revenues for everyone. However, a shopping center must be in an excellent location to produce results. Visibility and access are two key factors. If people can’t see your shopping center or if your property is too difficult or inconvenient to get to, shoppers won’t visit. For a variety of reasons, there is often more turnover with retail tenants, but when an investor secures a complementary tenant mix in their well-located center, they reap the rewards.

Self-storage

Own or lease and operate facilities that offer short-term storage solutions to individuals and businesses.

Self-storage gives you a great degree of flexibility when storing certain items for long periods of time. You can choose from different sizes, different types of units, and even units with features such as climate control to ensure that what you have stored stays in good condition

Challenges to Profitable Commercial Real Estate Investments

Reward doesn’t come free of risks or downsides. Every commercial property investment will involve challenges and opportunities that will impact your overall return and experience owning the property. For example, changing trends in retail and online shopping can impact store success or the need for warehouse space, requiring investors to stay agile. And while overall these property types provide stable tenants, some stores or businesses may close or relocate, leading to vacant spaces and requiring prompt action to find new tenants. These types of properties can also be expensive to maintain, and some properties may need higher initial investments for repairs or simply a higher upfront cost of acquisition.

Working with a Broker

Partnering with an expert who is a dedicated specialist in one of these property types is one of the best ways to identify and overcome some of the challenges that come with investing in the types of commercial real estate that make the most money.

For more insights and personalized advice about investing in commercial real estate visit iconichouse.ae