In general, the countries in the Middle East have seen tremendous growth in their already gigantic economy, especially in the commercial industry. The stable oil-centered economy of the Middle East areas has also helped expand other sectors of the economy. One such sector that has greatly benefited from the country's established economy is the commercial real estate industry in the region.
One of the premiere countries experiencing the said boom in the commercial real estate industry is the United Arab Emirates. Specifically, Dubai is gradually becoming one of the hottest areas for commercial investors worldwide. The demand for commercial property in Dubai significantly exceeds the currently available supply. In a 2006 report, the vacancy rate in the commercial real estate market in Dubai was noted to be -1%. Because of the large demand for commercial property, various multinational companies with investments in Dubai are searching for commercial property in nearby areas. New developments in nearby areas are being undergone to create the necessary space for the investing corporations. Thus, even the commercial real estate industry in outlying areas has greatly benefited from Dubai's economy.
Another country experiencing a boom in the commercial real estate industry is Turkey. Specifically, Istanbul, the country's center of finance, is leading the pack. Currently, approximately 50% of the population of Turkey is below 25 years of age, which is the working population. Thus, more employment opportunities need to be created in the country, promoting the country's commercial real estate industry further.
At present, foreign investing is reaching significant heights. Similar to the commercial real estate industry in Dubai, there is significantly more demand for commercial real estate space than there is available supply. Due to the lack of supply, the value of the properties in the area goes up. In a few years, investing in such properties could result in significant capital gains and returns of investment. All these factors combined make commercial real estate in Turkey very attractive to investors.
Another factor that makes Turkey appealing to investors is the gradually growing industry of tourism in the country. Although currently only a tourist destination during the summer, projects are underway to promote the country throughout the year. Thus, there is even more demand for rental homes and hotels in the area.
However, there are also several problems in the commercial property market in the Middle East. Because of the high demand and inadequate supply for office space, work environments are usually not adequate. Workspaces tend to be small, and sourcing of utilities is occasionally a problem. Also, there are occasional disputes regarding the regulations employed in the region, which have a tendency of changing without proper notification and dissemination. More developments are thus necessary to address these specific commercial real estate issues.
The oil-based economy of the Middle East countries, along with the good international relations they have formed with countries outside the region, ensures that the commercial real estate industry in the Middle East will stay strong for many, many years to come.
If you ask any banker, he'll tell you that anything over 4 units is considered a commercial property. If you ask any municipality regarding their trash pick up, you'll get the same answer, ditto with insurance companies but are apartments really commercial properties?
When you think of commercial property, do you think of tall skyscrapers, office buildings and warehouses?and possible large apartment complexes?
Well, apartments over 4 units are commercial properties but there is one big difference between apartments and offices. One space is occupied by residents and the other spaces are occupied by businesses.
That's a big difference! Did you know the 3 out of 4 businesses go out of business after the first year? Ninety percent are out of business by year five! If your renting to businesses, chances are, your turnover rate is going to be higher than a residential property and you should know that tenant turnover is your biggest expense in any multi-unit property.
People always need a roof over their head. If they move out of your place, they are moving into someone else's (if you treat them with respect, they will stay longer!) Businesses just disappear and when they break the lease, it's hard to get money out of a bankrupt company!
A lot of commercial properties rely on 3 or 4 big tenants. If they lose a tenant, they've lost 25% of the income. If the property cost you $1,000,000 and you lose 25% of your occupancy, you could be at a breakeven point or worse?upside down.
Statistics show that it takes an average of six months to fill a commercial space. The main reason is that the pool of potential renters is not that big. In contrast, with a residential property, there is a vast pool of potential renters and the turnaround is one or two months instead of six.
For the same million dollars, you could get a 20 ? 60 unit property (depending on where you invest), if you had 20 units and lost one, you've only lost 1/20th of your rent, you still have plenty of cash flow and more importantly, plenty of spend able income.
There is one other thing you should consider, when you're attracting a commercial tenant for your property, you usually agree to do a ?build-out? which means you change the space to make it conform to the business. This could cost you thousands of dollars.
With an apartment unit, the ?make ready? usually consist of paint and carpet. If more is needed, it's usually paid for from the previous tenants security deposit.
Yes, apartments over four units are considered commercial properties but as you can see, they are in a class by themselves when you compare risk versus reward.
Both Seth Willis Jr. & David Lindahl are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Seth Willis Jr. has sinced written about articles on various topics from Entertainment Guide, Real Estate and Travel and Leisure. Seth Willis Jr. is the webmaster for and a savvy real estate investor. His fo. Seth Willis Jr.'s top article generates over 368000 views. to your Favourites.
David Lindahl has sinced written about articles on various topics from Real Estate, Investments. David Lindahl, also known as the ?Apartment King? has been successfully investing in single family homes and apartments for the last 10 years. David currently owns over 3,200 units aroundthis country. David regularly shares his secrets and experience on t. David Lindahl's top article generates over 33100 views. to your Favourites.