How to invest in industrial property
Category Commercial and Industrial News
Investing in industrial property offers many advantages for companies and for individuals wishing to diversify their investment portfolios. In South Africa, there are two ways to invest in industrial property - you can either own property directly or you can invest in listed property funds. Whichever way you choose to invest, the property market is well-known as a stable investment.
Weighing up the advantages of investing in industrial property
For businesses, there are many reasons why owning your premises works to your advantage. For starters, your bond payments will only fluctuate when the interest rate changes. This could potentially lower your monthly payments, as has been the case in May 2020, with the latest cut to the repo rate. Over and above this, you will be paying off your own asset rather than paying off an asset for somebody else. This asset will appreciate over time so that when the time comes to sell your premises, your company can make a profit. In addition to this, there are tax advantages to being an industrial property owner. Owning industrial property also means that you can make any alterations required to maximise efficiency in your operations.
Choosing the right industrial property for you
If you have decided to buy premises for your industrial operation, it is important to ensure that the premises will meet your needs well, both now and in the future. The obvious thing to consider is size and any additional space that you may require as your operation grows from strength to strength. Other factors to be considered include proximity to highways and arterial routes, as well as the nearest airport. The type of power that is on offer should also be a consideration, as should the building's height to the eaves.
Once you have found the property that's right for you, you will likely need to apply for a commercial loan. This involves collating an array of documents including a business plan, financial details, personal details and more.
Investing in listed property funds
If you choose to invest in a listed property fund, then - rather than purchasing an industrial property on your own - you are investing in shares in real estate investment trusts or listed property companies. Listed property funds will appeal to investors who want to take advantage of the stability offered by ownership of industrial property without needing to be exposed to the risks that come with it. These risks, which are of particular concern in cases where an owner has bought property with the express intention of letting it out, include non-paying tenants and maintenance costs.
One of the other advantages of listed property funds is that - unlike real estate - shares can be quickly and fairly effortlessly traded. It is important to remember that listed property funds are not immune to fluctuations in the market - they should be viewed as a medium to long-term investment. It is also worth noting that as these are collective investment schemes, they are well regulated and investors are protected from losses caused by embezzlement or fraud.
However you choose to go about investing in industrial property, it is a big decision and there are many factors which will need to be taken into consideration. The team at 3Cube Property Solutions has a wealth of experience in the world of industrial and commercial property and they are on hand to assist and advise you through every step of the process. Contact us today and take the first step towards making your investment in industrial or commercial property.
Author: 3Cube Property Solutions
