Investing in retail properties

Investing in shop premises is one of the possibilities when you want to invest in commercial property. Since this is a fairly unique form of property investment, it also comes with a number of specific advantages and points to watch out for. That's why we're here to tell you everything you need to know to make a good property investment in retail property.

Why invest in retail properties?

First of all, it is valuable to address the specific advantages of investing in retail property. This gives you a clear picture of what you can expect in a positive sense. It is what convinces most real estate investors when they consider such a real estate investment.

• Medium-high efficiency: In many ways, the expected return is the most important point of attention. After all, with a real estate investment, you want to accumulate a nice return. You deploy capital to make more capital. That is essentially the idea behind a real estate investment. With a return of between 6 and 7% you certainly cannot complain about this. It is above average for a property investment. We are talking here only about the rental income in relation to the initial capital investment. An expected increase in the value of the retail premises is added to this.
• Reliable tenants: Another advantage of investing in retail premises is that you can generally find fairly reliable tenants. Companies that intend to sell products generally do not do so for the short term. A tenant with a clear, feasible business plan is therefore likely to aim for a long-term lease. This considerably reduces the chance of having to deal with problems. A positive point, especially compared to other real estate options. When renting out student rooms, for example, on average you can expect a lot of extra problems.
• Central location: When investing in shop premises, it is generally a good idea to choose a central location. The nice thing is that in many cases this also corresponds to the supply. Shop premises in the centre of a village or town are unlikely to lose their value quickly. The central location is deliberate; it gives the largest possible group of people the chance to visit. This is something that naturally attracts tenants. The larger the potential target group, the more valuable the property will be. Also with a view to the future.
• More vacancy after crisis: When the corona crisis had just broken loose, the vacancy rates in shops increased slightly. A fairly logical development, given that shops have had a rather difficult time. But for real estate investors, this obviously offers opportunities. It is now possible to choose from a relatively large supply, knowing that retail properties will perform better again after the corona crisis. Many property investors have had this insight, so that the vacancy rate is already slowly but surely starting to recover. Vacancy rates are falling, which means that the value of retail properties is starting to increase again. After all, vacancy does not benefit the owner of a retail property who tries to rent it out. Now that this is decreasing, it can be seen in the prices.

What to look out for when investing in retail property?

Nevertheless, when investing in retail property, it is important to keep a few things in mind. For example, it is not the intention to simply choose a retail property to invest in. This requires some nuance. Important points in this area include:

• Future prospects of the location: It is not necessarily a given that the current location of the retail property will always remain in demand. To find out more about this, it is a good idea to look at the relevant developments. For example, is the number of inhabitants of the village or town continuing to increase? Are there proportionally more or less young people living in the area? What is the condition of other shop premises in the centre? Are there plans to build a whole new shopping centre in the area? All these things play a significant role with regard to the value of the retail property.

   

• Finding a good provider: If you have the idea that investing in shop premises is interesting for you, you still need to find a reliable provider. A party that is willing to help you find a shop premises. There are a few providers who have already proven their reliability. Zimmo, Buddies Real Estate and Home Shopping Fund are examples of this. They make it possible to make a targeted investment with the right capital.
• Risk profile: When investing in retail properties, take into account the applicable risk profile. As mentioned earlier, for example, retail properties were hit hard during the corona crisis. Moreover, there is already a trend that many shops are digitising. It is important to take this into account. Investing in retail property is not risk-free. This is less the case when investing in supermarket property, for example. There is less chance of complete digitisation of the supply.
• Checking the zoning plan: Crucial when investing in retail premises is a Control of the zoning plan. This indicates what is allowed with the shop premises. Do you have certain creative ideas about what you want to do with the premises, for example? Then you should request the zoning plan from the municipality to see what is possible. It provides clarity at a stroke and prevents a possible mistake.

Invest in retail property with Immotokens

But we are not finished yet. Information about investing in shop premises is not complete until we have also discussed the Immotokens option. This form of innovative technology ensures that digital versions of shop premises are created on the blockchain. This means that you only need to interact with the digital version of a shop premises, as they guarantee ownership of the physical premises. From as little as €50, you can share in the rental income and increase in value of a shop premises. The sky is the limit. Discover now what Immotokens can mean for you!