Are you planning to invest in Turkish properties but unsure whether to invest in a residential property or a commercial one?
Stay with us as we explain commercial and residential real estate and which one is the ideal choice for you.
Investing in Commercial Real Estate vs. Residential Real Estate
While investing in properties is a surefire way to maximize your assets and strengthen your finances through rental income generation, it requires proper knowledge of the benefits and challenges of both commercial and residential real estate to understand which type can effectively help you meet your financial goals.
Commercial Real Estate: What Is It?
As the name suggests, commercial real estate includes properties meant to be used for commercial purposes. This can include shops, office spaces, hotels, warehouses, apartment complexes offering a plethora of rental units, etc.
Investors can rent their commercial real estate to business owners who can use them for day-to-day operations.
Factors that are responsible for the success of commercial properties include their location, their accessibility, economic conditions, etc.
Turkey’s modern infrastructure, flourishing tourism sector, and fast-growing economy have made the local commercial properties an appealing option for foreign investors, in turn, contributing to the ever-increasing demand for valuable real estate.
Residential Real Estate: What Is It?
Residential real estate involves properties used for housing purposes. This property type includes single-family homes, duplexes, triplexes, townhouses, and apartment buildings with less than four units, etc.
Investing in residential real estate is mostly seen as a much less risky option.
To add to this, the residential real estate market in Turkey is progressing at a rapid pace as homes in Turkey have experienced a significant rise in prices. The Turkish citizenship by investment program has only fueled the demand for Turkish properties among foreigners as investors continue to purchase holiday homes as well as permanent residences in major cities.
Affordability
Compared to commercial properties, residential properties are far more suitable for those who are just beginning their investment journey and want to play it safe.
The down payment for commercial properties is much higher than residential ones. To add to this, commercial properties are also at a high risk of being affected by economic declines as well as shifts in market activity. On the other hand, residential real estate is perfect for novice buyers as its demand always remains stable due to people’s need for housing and is unlikely to be affected.
Management
The upkeep and management of both residential and commercial real estate can require a lot of effort. However, since the tenants of commercial properties sign longer leases compared to residential ones, they become responsible for the maintenance of the property.
Potential for Appreciation
Residential real estate has massive potential for appreciation as the development in that area boosts, leading to more people's interest in the homes.
On the other hand, the appreciation of commercial properties is tied to economic growth and urban expansion.
How to Choose the Right One?
So between the two types of real estate, how can you decide on the right one?
To get your answer, you should first analyze your financial situation. As we mentioned before, commercial properties cost more money upfront apart from their purchase price. So if you have the financial capacity for a commercial property, only then should you opt for this type.
Besides this, residential properties are way more accessible, especially to buyers with limited finances.
Commercial properties also require a certain level of expertise to maintain and meet tenants’ needs compared to residential properties. Oftentimes, investors of commercial properties will invest in property management companies to take care of the maintenance and management of their property.
Finally, you should always have the right professionals on board to help you access an extensive portfolio of properties. Only when you have access to the country’s prime real estate is when you can truly get a better idea of what the market has for you.
Prime Property Turkey’s team has industry-leading agents to help you enhance your understanding of the Turkish property sector and guide you toward choosing the property type that is most suited to your needs and preferences.
Feel free to contact us and avail a free consultation with our agents.
