8 Reasons To Invest In Commercial Real Estate In 2014
There are a multitude of reasons suggesting that Canadians should invest in commercial real estate right now. Some may be obvious, others perhaps not so much.
For those investors that have been sitting on the fence, here are 8 reasons why you should invest in commercial real estate that have nothing to do with getting in before interest rates increase.
1) Tech Worries
Apparently, Warren Buffett isn’t that bullish on tech according to recent reports. With $4B valuations the norm for unproven startups, (many with no revenues yet) it is easy to understand the concern. Simultaneously, alternative digital currencies have become so fragmented that fears of further major losses online are troubling some regulators. This could definitely add up to a re-focus towards brick and mortar investing versus investing in the ‘cloud’.
2) Offline Trending
In addition to the above, there seems to be a wider trend towards real world versus virtual reality again. We’ve already seen technology come around to compliment brick and mortar retail shopping, rather than compete with it. Leading marketing gurus like best-selling author Seth Godin are pointing to the benefits of in person connections versus online marketing. It’s no secret that Facebook has lost its cool and LinkedIn has been losing traction, as people are again waking up to the value and joy of interacting and connecting at local stores, restaurants, and coffee shops. This should benefit commercial property owners in vibrant urban areas, such as Edmonton.
3) Tax Advantages
Novice investors might leave taxes as an afterthought. Sophisticated investors appreciate the wisdom and enhanced returns of investing with taxes at the forefront of the decision making process. Real estate is a natural tax favored investment in many ways.
In a world of markets constantly in flux, the security and peace of mind of a hard asset such as commercial real estate is hard to beat.
5) Dual Profit Earning Machines
Income investment properties such as local shopping plazas simultaneously offer both passive income and passive capital appreciation.
6) Rising Consumer Spending
The rising global economy and renewed financial confidence in tandem with rising home values, means more consumer spending. This should boost already buoyant retail figures in Canada’s top markets.
7) Increased Transaction Activity
We’re headed into a period of major transition, with both Boomers and Millennials shifting to new locations. This will be great for housing landlords and brokers, but it also means plenty of activity and consumer spending will be required. This should increase retailer’s sales figures, and ultimately those of their landlords as well.
8) The Right Timing
Looking both on a micro level at individual markets such as Edmonton and macro property markets, trends suggest that it is an optimal time to make new acquisitions and investments ahead of further property value increases.
Want to learn more about Richard Crenian?