As the first half of 2010 comes to a close global property markets at the prime end have shown some improvements in response to the gradual healing of both world economy and the credit markets. In the US, the story remains one of steady improvement in-creasing availability of capital and a continuing flow of deals to market. In Asia Pacific economic performance is likely to outstrip the rest of the world but watch out for further interest rate rises. In Europe, while trading has been relatively strong austerity measures will keep confidence and activity in check with. Tough choices ahead for global policymakers can the second half of the year usher in further positive momentum.
Many commercial properties are technically in default with loans due in late 2010if regional banks take a more aggressive stance many more assets will come to the markets and available liquidity would be insufficient to absorb the additional volume and potentially depress prices.
Investing in Commercial Property
Presently office spaces may witness yields in the range of 10.5% - 13%. While owning and leasing out commercial property, one needs to consider the profile of the development and the developer’s brand name and reputation in the market. The profile of The development directly correlates to the target clientele-corporate. IT companions, multinationals back offices, etc. This has its own set of risks and advantages in terms of tenant security, lease tenures or lease rentals.
Further, form a long-term perspective, one needs to see how the property would be managed and by whom, For many corporates/MNCs and IT clients-facility management security and house keeping in the premises and other value added service are also critical inputs for the selection of the premise.
Investing in Residential Property
Residential properties currently witness yields in the rang of 2.5-5%. As residential property yields relatively lower returns the variations in the rentals are relatively less as compared to other asset classes.
Similarly, the residential rental market observes relatively lower fluctuations in demand as compared to retail or commercial properties, which are more dependent on the overall performance of the economy.
A major feature of residential leases in the they are generally for a shorter period of 11 to 12 months. While considering a residential property, one needs to take stock of the profile of the locality, its surroundings and other related infrastructure facilities.
Similarly, in case of under-developed properties, it is important to consider the project profile, the developer’s brand name and past track record. These factors are crucial in determining timely deliver, ensuring quality construction and making user that all he legal prerequisites and other regulatory approvals are in place.
While owning and leasing out a residential property, one must consider issues like the management of the property itself. There are various out-goings the one needs to account for like maintenance charges, property taxes and other municipal taxes, which are generally not charged separately to the lessees.
Before purchasing any property, one most do a thorough legal check