Things to Know about Commercial Real Estate in Tenerife
The term commercial real estate (property) refers to properties, which are used by companies to run their businesses, such as factories, office buildings, warehouses, hotels, logistics centers, distribution centers, stores, restaurants, shopping centers, cinemas, food outlets, bowling alleys, and other types of entertainment facilities.
The key indicator of commercial real estate is that it is involved with the moneymaking efforts of a business, but does not actually engaged in goods production. These properties can be generally classified in four broader categories: retail, office, industrial, and hotels.
Usually commercial properties cost more than a residential real estate. Although it is possible to purchase small, individual offices and shops at prices comparable to residential properties, the cost of large, high-end commercial assets, such as office blocks, shopping centers, or large industrial premises, can run into hundreds of millions of dollars.
Office properties include small professional buildings, single-tenant buildings, skyscrapers, and everything in between. Office space in commercial property is not restricted to metropolitan areas; suburban office blocks are spread on the landscape everywhere there are residences to support them. These buildings are usually mid-rise structures, and are located in the suburbs.
Retail properties can be freestanding, like a restaurant or bank building. They are usually located on the lower floors of multi-family structures and office buildings, especially in urban areas. Retail offerings abound in neighborhood centers and strip malls.
There are many hotels in Tenerife, which provide accommodation paid on a short and long-term basis. Facilities provided may vary from a storage room for clothing and a basic bed, to luxury features, like en-suite bathrooms. In 5 star Tenerife hotels, there are additional guest facilities such as business centers, child care, swimming pools, social function services, and conference facilities. To allow the guests to identify their rooms, they are usually numbered.
As with all investment, the returns are different depending on various circumstances. But where residential investment real estate usually returns somewhere around 4-5% a year, the returns for the Tenerife commercial real estate can be higher – depending the quality of the building, on the location, and market conditions at the time.
While commercial property usually has higher rental returns, it does not always have the same level of capital growth as residential real estate, and can be more affected by economic conditions than its residential counterpart.
Reasons to Buy Commercial Real Estate in Tenerife
Tenerife is a place of the big opportunities for foreign investors interested in buying highly viable commercial property. Tenerife is an extremely popular European holiday destination, thus commercial property purchases offer huge financial rewards in the correct hands, whereas many overseas investors are purchasing commercial real estate as part of a buy to rent program that has the potential to present the investors with lucrative returns.
For many years, Tenerife has been very popular with a large sector of the tourist market. In fact, it has even been dubbed the European Caribbean because of the favorable climate that the island enjoys. As other holiday destinations throughout the world are affected by high levels of humidity, extremes of temperature, and tropical storms, Tenerife has one of the best climates in the world with average temperatures ranging between 23-28 degrees and no earthquakes or hurricanes! Due to the great popularity of this investment destination, Tenerife is now undergoing massive growth across all sectors with many exciting new development schemes being under construction at the present day.
Buying off-plan commercial property in one of these many new development schemes offers investors the excellent opportunity to see their real estate increase in value during construction whilst seeing a sizeable growth in the value of their real estate after the completion of construction. With an increasing growth in the value of commercial property, purchasing of commercial real estate as part of a buy to rent program can become a shrewd and very viable investment decision to make.
There are many places in the world, which experience cycles of fluctuating property prices. This means that you may buy a commercial property now and find that in one year it is worth less, instead of more! This is not the case in Tenerife. For the past two decades, Tenerife property prices have increased year on year.
The popularity of Tenerife depends on a number of different factors. Obviously, the favorable climate conditions are the main contributory factor in this island becoming an extremely popular tourist destination. However, Tenerife has kept up with this explosion in the numbers of tourists and now boasts a lot of excellent facilities, including some fantastic bars, golf courses, hotels, restaurants, and a whole host of entertainment. So, there are many reasons to buy commercial property in Tenerife, which is a reliable investment tool for everybody!