For investors in commercial real estate: compare the yield and rent on the most promising streets of the world

June 29, 2016

For investors in commercial real estate: compare the yield and rent on the most promising streets of the world

Experts from Swiss Appraisal (Switzerland) has studied the segments of commercial real estate in 200 countries around the world. The most stable situation is observed only in 65 countries.

Streets with the highest profit

Among the leaders — the streets of Beijing (Georgia, Tbilisi) with a yield of 9.9%, Knez Mihajlov street (Serbia, Belgrade, 9.1%), Khreschatyk (Kiev, Ukraine, 9%), street Macedonia in Skopje (8,75%) and Stoleshnikov lane in Moscow (8.5%). Of the European countries in a high position in the ranking are the Baltic Countries:

7th place — Pilies, Didžioji, Gediminas Avenue (Vilnius, Lithuania) - 7%;

9th place — street Viru (Tallinn, Estonia) - 7%;

12th place — Indranu street, Vaļņu, Kaļķu iela, Audio, Terbatas (Riga, Latvia) — of 6.75%.

Turkey with Baghdad Avenue in Istanbul took the 17th place (5.1%). Next come the countries of Central and Eastern Europe — Slovenia, Romania, Czech Republic, Slovakia, Bulgaria and Poland.

42 line is occupied by Germany. Commercial premises at the Munich streets Kaufinger and Neuhauser Straße bring about 3.5% per annum.

In Spain most attractive street in terms of yield of retail space is the Porta del Angel in Barcelona (3.5%). In Italy the same result (3.5%) showed via Montenapoleone in Milan. Commercial premises on the Champs Elysees in Paris has 3% of profit per year. Yield of Bond street in London is 2.25%.

Similar performance is shown in all of downtown Helsinki (Finland). Street Stroget in Denmark took 61st place. The last ones in the list are Library street in Stockholm, Sweden (1.8%), and Karl Johan street in Oslo (Norway) with 1.75%.

Rent

In the ranking of streets with the highest rates of rent the Fifth Avenue in New York is the leader, followed by Causeway Bay in Hong Kong. Next on the list are the streets of the developed countries of Western Europe — the Champs Elysee in Paris, Bond street in London, via Montenapoleone in Milan.

They are followed by retail property on the street Kohlmarkt in Vienna. German Kaufinger and Neuhauser Strasse in Munich are on 11th line.

Conclusions

The success of your investment project is determined at the stage of selection of the object. However, each proposal is unique, it has its strengths and weaknesses. As a result, a dwelling house can sometimes bring even more revenue than the premise for supermarket, and "secondary" housing is sometimes more profitable than the new buildings. The location and type of the object is one of the main criterias, but not the only one.

The main point is not to go to extremes and do not seek to buy properties with maximum yield. Because the second pan of the scale always there are your risks of a shortfall in profits. For example, due to the fact that you don’t have a tenant for your premise.

If you are focused on a long-term investment, choose the shopping area that already has a real reliable tenant - a well-known company from the food retail for example, bank, clothing stores, etc.

Important parameters are: the duration of the lease, the rent, the terms on which the contract may be extended, the system of taxation, the maintenance costs of the object.

Text – Alena Eliseeva, ee24

Photocredit flickr.com