There are many benefits for professional developers to consider when it comes to undertaking a conversion project. These benefits include:
◆ Locations with high demand - commercial properties are often in prime locations, further increasing the demand amongst prospective buyers and tenants. Location can significantly impact the return on investment once the development is complete as they have a higher rental and resale value rate.
◆ More affordable pricing - if a commercial building has been left vacant for a lengthy period of time, it is likely that the current owner will be keen to make a sale, thus giving you more leverage to negotiate a competitive price as a prospective buyer.
◆ Higher profit potential - competitive buying prices often mean that there is more scope to make a higher profit from the development project, if you are planning to resell the property.
◆ Greater rental yield potential - if converting a commercial property into an HMO, such as flats and student accommodation, there is greater potential for higher yields from rental tenants.
◆ Adaptability - commercial properties benefit from being a blank canvas, meaning that there’s more potential for creative design, structure and decorative elements to be implemented when converting the property to residential.
◆ Incentives from local authorities - many local councils will offer financial incentives to developers converting commercial properties, with the aim to promote urban regeneration and add more housing to the local area. These incentives can include tax breaks, grants, and subsidies.
◆ Diversification of your property portfolio - by diversifying the type of properties invested in, this helps to spread the financial risk, leading to greater financial stability in the long term.
◆ More sustainable - by converting existing infrastructure rather than demolishing and rebuilding, this method is better from a sustainability perspective and reduces construction wastes, and often costs.
What are the key considerations before undertaking a commercial conversion project?
