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Deciding which UK property sector will work best for you? Read our overview of commercial and residential property to help you decide.
It’s one of the key questions that property investors ask at the start of their investment journey.
“Which type of property should I choose?”
Whether you’re a first-time property investor, or even if you’re a seasoned one, there are plenty of things you need to consider before making your decision.
You can read some useful information in our recent articles that can help you during the initial property investment research stage:
In this article, we’re going to look at two of the UK’s largest property sectors – commercial vs residential rental property.
Both sectors are hugely popular with the global investor community, and can help you to achieve strong, consistent returns. But when addressing what is the difference between commercial and residential property, knowing their individual qualities will help you to understand which one is best placed to help you to achieve your personal investment goals.
Below is an overview of both sectors and how they compare.
Buildings classed as commercial properties are generally those that have a primary purpose for housing businesses.
Income and returns are achieved in the form of regular rental payments from businesses leasing workspace, while capital appreciation is also achievable in the long-term.
Commercial property is more generally favoured by institutional investors, such as pension funds.
As with any UK property investment, commercial property makes for a strong long-term investment, trusted by generations of investors worldwide.
It’s important to understand the advantages and disadvantages associated with commercial property investment:
You can keep up to date with the latest research and data from the commercial property sector with the following resources:
A residential property provides a place to live for either an owner occupier or tenant in the rental sector.
Typically, buy-to-let property has been the largest residential investment sector in the UK over the last 30 years. These are usually homes originally built and designed for owner occupiers that have been converted into rental homes for the private rental sector. In recent years, the purpose-built (build-to-rent) rental property sector has expanded rapidly, and for many is now seen as the modern residential rental investment in the UK. You can read more about build-to-rent property here.
Like commercial property, you can earn a regular income with residential property in the form of rental returns, and long-term returns with capital appreciation.
Private investors generally favour residential property, particularly as it’s a property type many of us are all generally familiar with.
Unlike many other asset classes, UK residential property is renowned for its strength and resilience even during times of wider uncertainty. People will always need a place to live, and regardless of wider economic concerns, this will never change.
Here are some of the main advantages, and points of consideration, of investing in residential property:
You can keep up to date with the latest research and data from the residential property sector with the following resources:
While commercial and residential property have their own qualities, both retain the fundamental benefits that underline property as an asset class. They are physical, tangible assets that can help you achieve a regular income stream and strong long-term growth.
Before making any new investment, it’s important that you consult with an independent financial advisor to discuss your options in full.
Furthermore, Select Property Group is one of the UK’s leading property developers and investment specialists. Our team would be delighted to share details of our latest residential and student property investments with you – contact us here.
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