Buying a property for investment is very different from purchasing a residential property. It is not only that the purposes vary. Instead, some very crucial aspects differ from each other. A commercial Turkey property is in remarkably high demand. 20% of foreign investors choose Izmir for a profitable investment. As a result of the global recession, the value of the lire has fallen significantly. But Turkey's tourism has a strong base and is flourishing gradually. Every investor readily purchases property on this land. But it would be pointless to say that commercial properties have less risk than commercial property. Therefore, one needs to go through some crucial aspects before buying a beneficial commercial turkish property.
Titles
Residential Real Estate Turkey
Residential property majorly includes apartments, single-family homes, and townhouses. These properties are inhabited by either the property owner or stone tenant. A residential property in Turkey bears symbols of turkish nationality. There are some inevitable emotional bonds.
Commercial Real Estate
Commercial real estate has been a quintessential investment market. Here, the owner uses his property as industrial buildings, hotels, public facilities, office space, etc. Most of the property owners in Istanbul prefer leasing their property instead of running their own businesses. Plenty of hotels and resorts are built on such spaces. An apartment in İstanbul has been remodeled for commercial purposes.
Loan Amount Sanction
It is an open secret that commercial property suffers a greater risk than a residential one. Therefore, banks are partial to residential properties. While residential properties get up to 90% coverage, commercial properties are only supported by 30-40%. Besides, there is vast competition from foreign countries. Last year, foreign investors contributed $4.6 billion to the Turkish economy. This year, the margin is expected to rise. Most of the investors are using cash to buy the property. Therefore, a challenging situation prevails throughout the year for commercial investors inside the country.
Nevertheless, there are several apartments for sale. But commercial investors can use private space as retail spaces and facing unlimited barriers. Still, innovative ideas for remodeling an apartment are coming up.
Tenant Issues
Commercial properties always have to deal with more tenants than residential property. So, commercial properties often find themselves in more trouble than residential real estate. Therefore, to buy an apartment in Turkey, one receives more financial support than a commercial property.
Rate Of Return Profile
Opportunity for a long term investment is the key feature of a turkish property. Commercial contracts' validity lasts up to ten years. The investors earn a 5%-8% profit from the property per year. But when it comes to residential tenants, the profit margin comes down to 1%-2% per year. It's a drastic change in profit margin. Also, the contract between the owners and the residential tenants lasts only one year. The validity of the agreement strictly depends on the country's said rules and regulations.
Risk Issues
Commercial properties share greater risk than residential real estate in terms of security. Any damage to the residential property is a direct concern of the owner. In the case of a commercial property, it depends solely on the tenants. If the tenants fail to take proper care of the property, the property decays gradually.
But there is less risk for the commercial property owners of getting plunged into debts. As the contracts between the commercial property owners and the tenants last up to ten years or more, there is financial security. On the other hand, when owners advertise apartments for sale in Istanbul, they clarify the contract period. Anyone who violates the regulations become directly answerable to the owner. They are asked to leave the property on short notice in shine cases.
Difference In Valuation
Property valuation is one of the most significant matters to look after buying a second-hand property. There are some striking distinctions in valuation between the commercial real estate Turkey and the residential properties.
Valuation for business properties depends on both present and future possibilities of the place. According to economics, big enterprises hail several small industries. Therefore, before buying a commercial property, one needs to look after the socio-economic prosperity of the place. Even the location is remote, and there is no possibility at all, some enterprises bring opportunities with them.
Most of the commercial properties create opportunities for several industries. Facilities of the location such as,
- Transportation
- Electric supply
- Condition of infrastructure
- Future possibilities
- Grants from the government
decides what businesses will spread wings in that area.
On the other hand, residential properties have their own vantage points. A prosperous residential property depends on:
- Location of the workplaces from the property
- Number of educational institutions near the property
- Water and electric facilities
- Parking area
- Location of the nearby market
Maintenance
Usually, one or two tenants inhabit a residential property. Therefore, the chances of damage are comparably low. Also, the cracks are easily repaired. These injuries are fixed only by consulting a plumber or electrician. Sometimes, the responsibility of damage repairing falls on the landowner's shoulder. Sometimes, tenants solve the trouble.
On the other hand, commercial property İstanbul has some regulations. Here, only the tenants are supposed to mend what they have damaged. The rate of damage is sometimes too high that they appoint an on-site property manager. Therefore, the cost of commercial property maintenance is always higher than residential property.
Types Of Lease
There are differences like the lease. In Izmir, most of the property is leased on these regulations:
- The duration of the lease is more for a commercial Property Izmir. Simultaneously, the tenants of a commercial property enjoy a lease of more than ten years, while residential tenants' contract only has one year of validation.
- Residential property is more active than a commercial one. Tenants live 24/7 in residential property while tenants in commercial property enjoy the service of some hours.
- The kind of relationship that a commercial property owner and his tenant share is far more professional than that of a residential property.
These sole differences have added these properties in two different sections.
