Commercial or private real estate: what’s the difference for expatriates?

In terms of rental real estate investment, investors can, among other things, choose to turn to commercial or private Best Real Estate Companies in Dubai. These two types of assets have many differences and specificities that should be carefully analyzed before making a choice, especially as an expatriate.

What is commercial real estate?

Definition

Commercial Best Real Estate Companies in Dubai refers to goods intended for a professional activity and held by non-occupying professionals

Example

Among the commercial goods, we can cite for example: commercial premises, factories, shopping centers, shops, private car parks, offices, warehouses

What is the difference between commercial real estate and personal real estate?

There are many differences between commercial real estate and real estate between individuals, relating to acquisition or rental.

Higher rental income for commercial real estate

Commercial Best Real Estate Companies in Dubai have the advantage of offering rental income generally higher than that of a residential building, with a gross yield between 5 and 7%, against 3 to 5% on average for private real estate. However, this varies depending on multiple criteria. Let us mention the location of the property, the district, the city, the demand, the type of property … 

A longer lease term in commercial real estate

With commercial Best Real Estate Companies in Dubai, the duration of leases is also longer (minimum 9 years), compared to 12 months to 3 years for a residential lease for empty rental. This is also a positive point because it reduces the risk of rental vacancy.

On the other hand, higher purchase prices

However, the purchase of a commercial property requires a much larger budget than the purchase of a particular property. The contribution requested by the banks is, therefore, higher and the loan terms are shorter. In addition, the acquisition of a commercial property is more complex and turns out to be riskier than a purchase in residential real estate, especially for first-time buyers.

Finally, you should know that the real estate value of a commercial property is largely defined according to the level of income generated by the operator. The value of commercial property therefore varies much more than that of a property owned by an individual. 

Expats: should you choose commercial or private real estate?

For expatriates, certain factors specific to non-resident status should be taken into account when choosing between business investment and an investment between individuals.

Difficult to finance a remote business project for expatriates

First of all, you should know that in the vast majority of cases, banks refuse to grant a loan to expatriates who wish to invest in commercial Best Real Estate Companies in Dubai

Considerable tax advantages in residential real estate

In addition, the purchase of residential property from an individual and its rental will be particularly advantageous for expatriates. By renting their property, non-residents can indeed benefit from the LMNP (Non-Professional Furnished Rental) status. This system allows them to benefit from very attractive tax advantages, on condition of renting furnished accommodation. 

The LMNP status allows in particular to deduct depreciation as well as Real Estate Companies in Dubai.  charges from its tax base. Often it is possible to reduce the taxation of rental income to zero thanks to this device. There is no similar device in commercial real estate.

A more reassuring and easy-to-access placement

Rental investment between individuals ranks first among the preferred investments of non-residents. It represents, in fact, a secure, profitable and easy-to-access investment choice.

Another point to consider: by investing in furnished rental property, you can more easily recover your property in the event of an early return or other necessity. In fact, in France, in furnished rentals, the departure notice is 1 month for the tenant and 3 months for the owner. In commercial rental, the notice is 6 months before the end of the lease term. However, it is still necessary to justify the non-renewal of the lease in the commercial rental as in residential rental.

Residential leasing makes it possible to meet many property and financial objectives

For example, it allows expatriates to benefit from additional income during their expatriation. Rental investment also allows you to prepare for retirement or anticipate the future of your children with confidence. On the other hand, to make this project a reality, it is better to be accompanied by professionals able to ensure the success of your investment in  Real Estate Companies in Dubai.

 

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About the Author: Zunair Maqbool

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