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Factors influencing commercial property market - what investors should consider

Covid-19 has wreaked havoc on most markets and commercial property is no exception, says Louis van Rooyen, broker for Rawson Properties Somerset West. However, there are still great opportunities for investors who understand the interplay of factors influencing today's market.

“The first thing every investor needs to remember is that property – whether commercial or residential – is a long-term investment,” says Van Rooyen. “It’s a cyclical market and there will always be ups and downs. The key to maintaining a strong long-term investment trajectory is to drown out the noise and volatility of the moment and focus on balancing the core factors that determine a property’s profitability in every market.”

“A good quality property with strong tenants means a lower risk profile, so condition and tenant mix are both important,” he says. “Location, property type, and the length of any remaining leases also play a role.”

The first and most obvious of these factors is rental rates – an area Van Rooyen says is particularly sensitive to fluctuating market conditions and the ratio of supply to demand. In order to achieve the best long-term results, he advises investors to examine rental figures within the context of a property’s specific demand profile, closely linked to its location.

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