Commercial properties
Major part of return is derived from income Yield compares favourably to gilts, historical yield from commercial property over the last ten years has been in the range of 5-8%. This is an excellent return in a low inflation environment. Regular inbuilt rent reviews ensure that rents keep pace with inflation. Diversification reduces risk.
The market cycle for commercial property is not closely linked to that for bonds and shares. Returns from commercial property are much less volatile than other financial instruments, they are in effect like holding a fixed income security. Interest on loans used to purchase property is deductible against rent, thereby reducing tax, such favourable treatment is not available for the majority of other financial instruments.
Quality benefits of commercial properties
