Despite that real estate, in general, is a valuable asset and less exposed to market fluctuations or inflation than securities, gold or other assets, it has some advantages over residential real estate, namely:
- This type of real estate has a limited supply with a fairly high demand. This is directly related to the fact that many international companies need an office, warehouse, co-working space and/or corporate apartments.
- ROI is much higher, although the exact figures are more difficult to establish because everything depends directly on the size of the unit/building, its class (A, B, C) and location. But in general, the ROI can be 2 times higher compared to the residential ROI, which is due to the much lower cost per 1 sq.ft.
- The price of capital is much higher, and the greater the cash flow generated by the property/unit, the higher the price of the asset itself.
- The lease agreement is concluded for a longer period of time, usually for 3, 5 or more years, which allows the owner to protect themselves from all kinds of downtime and/or negative market fluctuations.