Since the implementation of Beijing's property purchase restriction in February 2011, some small and medium-sized investors who are no longer qualified to purchase properties have shifted their sights to commercial real estate projects that are not subject to purchase restriction, and not only are commercial and residential apartments selling like hotcakes, but also stores and office buildings with investment value are also welcomed by the market.

Despite the overall positive trend of commercial real estate projects, however, the three types of products, namely, apartments, stores and offices, differ greatly in terms of investment cost, return cycle and risk scale. Cases of success or failure regarding investment in different projects also abound in the market. In the face of the current market, how should investors choose the right product for themselves?

Purely on the basis of return - investment in stores is the first choice

Mr. Yang has been in a particularly sunny mood recently, not only because he has just bought a BMW X5, but also because all the money he used to buy the new car was due to the appreciation of the residential and commercial apartments he invested in a year ago. On the other hand, Mr. Han, who invested in stores, was not so lucky. A few years ago, Mr. Han to 40,000 / square meter price of the loan to buy a set of nearly 200 square meters of stores, thought that you can rent out the stores at a monthly rent of 50,000 yuan, so as to rent to support the loan, but did not think that due to the surrounding competition stores more, his store has been vacant for four years, and during this period he paid the amount of repayment of more than 2 million yuan, the financial strength of the Mr. Han is not very strong for this! The company's business is not a big business, but it is a big business.

Compared with Mr. Han, Ms. Xu, who bought a set of office space, was a bit more fortunate. Two years ago, Ms. Xu by the impact of the construction of the new city, in the new city to nearly 16,000 yuan / square meter price to buy a set of more than 130 square meters of office space, at present, despite the office sales and leasing prices have risen, but the region's business atmosphere is still not very strong, so the lease price of office space is far lower than her previous expectations, so that Ms. Xu had to use the "chicken ribs". Ms. Xu had to use the term "chicken ribs" to describe the property.

Three different investment choices for three different people have brought three different investment returns, and the above case is not yet enough to show that investing in commercial and residential apartments is better than investing in office buildings, and even better than investing in stores. On the contrary, the stores should be the first choice for commercial investment purely from the point of view of return.

Investing in stores - to have the capital to support a shop

"The threshold for investing in stores is very high. " Zhang Hankun said. This is mainly determined by two factors, first of all, the choice of stores require a strong identification of the location and screening capabilities. As the saying goes, "one step short of three cities", very often, commercial projects in front of the door more than a street bridge or fence, will have a great impact on the project's business situation.

Secondly, stores have high capital requirements. Under normal market conditions, stores are priced at double to triple the average local residential market price, but their payment rates are usually 50 percent down and a 10-year loan. Higher prices and tougher loan requirements mean that the threshold for stores is several times higher than that of an average residential property. The long-term holding and profitability of stores will also be more obvious, and as the location continues to mature, stores will become more valuable. Therefore, in general, people who invest in stores are those who have a strong family background.

The three forms of property, namely stores, commercial houses and offices, are like classical music, pop songs and folk music. Stores, like classical music, have a rich connotation and need to be precipitated, may not be a hit but often new, and there is no lack of essence. The supply of commercial is relatively small, according to the general community 10% commercial supporting ratio, that is, 10 sets of residential with a set of commercial, and the good location of the commercial is very few. Commercial not only has the market demand, but also has the daily consumption demand of the general public, thus commercial in the economic bad times and daily consumption demand to do support. Under normal circumstances, the annual return rate of community retailers can reach 5%-6%, while the ground floor of office buildings can reach 8%-9%.

Low threshold for investing in commercial residences

Commercial residences are pop songs. Because of their small size and low total price, commercial residences can be accepted by the mass class and participate in the investment. In the current stage of domestic market conditions, due to the limited service standards of property management companies, many neighborhoods are difficult to maintain the quality of the property, resulting in a mixture of residential and office workers, making the quality of the community decline.

In this case, if the value of the land parcel in the area does not increase, the value of the houses in the community will not increase significantly, but will only grow with the monetary value and the average economic growth rate of the area. Therefore, in the context of the current national regulation of the economy, the blood production function of commercial housing is limited to leasing. Internationally, the ratio between the monthly rent per square meter of usable area and the price of housing per square meter of floor area, i.e., the equilibrium level of the rent-to-sale ratio, is about 1:300, while the current level of the rent-to-sale ratio in China reaches 1:800 or even 900, with the price of housing seriously deviating from its true value. In addition, the supply of the whole market is high, so the blood-forming ability of the residential property is relatively low, and its annual return rate is usually 3%-4%.

Investing in office space has a middle-of-the-road return

Office space is the national music of the property market. It has a similar concept with stores, also the more mature the neighborhood, the higher the rent is also the more stable. However, the requirements of office buildings for the surrounding atmosphere are different from stores. The development of office areas not only need to have a good living environment and pedestrian flow base, but also need the whole area business atmosphere and transportation support package.

Currently, as the state controls the overall supply of office buildings, the market demand for office buildings is relatively strong, and the overall market price is in a steady rise.

Expert advice on the direction of commercial real estate investment

The return on investment in stores is long, especially in the vicinity of newly built neighborhoods, where the location is not yet mature and the popularity is not strong enough, so the market cultivation period will be longer. In addition, the location of the store investment is the key. Usually, most stores are suitable for selection in neighborhoods with relatively large flows of people, especially in mature business districts where commercial activities are more frequent and commercial facilities are denser, and popular areas are conducive to the daily operation of stores. But for some emerging areas, due to still in the development stage, there are variables in the future business formation, so do not rush to a new business district. And the project around the transportation, supporting facilities, planning, etc. are important indicators of the investigation.

Buy commercial housing to examine the regional land appreciation

Commercial apartments due to change the original properties of commercial land, in the use of the function of the development of residential, but limited by the high-density planning requirements for commercial land, often the plot ratio is higher, resulting in the residence of the population density is too large, the comfort level declined, coupled with the cost of day-to-day utilities and so on Higher, buyers are mostly not qualified to buy real estate demand customer base, so the selling price compared to office buildings and stores to be lower. When purchasing commercial and residential apartments, on the one hand, we should examine the land appreciation of the area, and on the other hand, we should also focus on examining the project's competitiveness in the surrounding area and the level of property management, so as to ensure that the leasing price rises steadily.

Investing in office buildings should consider the regional office occupancy rate

When choosing an office building, investors should fully consider the occupancy rate of office products in the region, the degree of transportation accessibility, whether there is competition of the same type in the vicinity, whether there is a large backlog of similar products, as well as the entire region's business atmosphere and degree of maturity. The current situation seems to be that the vacancy rate of office buildings in urban areas is low, while there is a risk of surplus in some suburban projects. In terms of secondary sales, office sales with leases will have a great advantage, and vacant products will be relatively more difficult to sell.

Commercial projects cost more to buy than ordinary homes

Since the three types of products, namely commercial and residential condominiums, stores and offices, are built on top of commercially-used land, the tax expenses incurred from their purchase will be higher than those of ordinary homes.

Transportation and regional development are prerequisites for the purchase of commercial real estate

Under the influence of the policy of restricting purchases, the investment in real estate has become a history of high returns in a short period of time. But for investors, it doesn't mean the end of real estate investment. Since the implementation of Beijing's general residential purchase restrictions, not affected by the purchase restrictions, can be used for office or residential commercial housing, has become the object of investment buyers to chase.

Commercial housing is more suitable for long-term investment

For the future of investment in commercial housing can still be in the short term to get a high return on the issue of commercial housing, today's commercial housing has gone through the short-term rapid value-added times, today, a short period of time the rate of return is not as high as the investor's expectations, the commercial housing has gone through the period of high returns, the entire value-added space has become smooth. Nowadays, the return rate in a short period of time is not as high as investors expect, and commercial properties have gone through the period of high return rate, and the whole value-added space has become smooth, and it is rising steadily with the economic development. This situation is more suitable for long-term investment buyers. For investors chasing short-term investment returns, buying commercial properties for short-term investment is not a good choice due to the low appreciation rate of commercial properties in a short period of time in the future.

(The above answer was posted on 2015-10-10, please refer to the current relevant housing policy)

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