The prime location, limited number, high liquidity … are outstanding advantages that type of apartment shophouse (commercial apartments) are more interested investors. However, buying a shophouse is also risky.
The following factors, including benefits and risks, will help you determine whether to buy a shophouse apartment.
The benefits of buying a shophouse apartment
First: extremely favorable location. The shophouse is usually located on the ground floor of large condominiums, or on the main street frontage, where traffic is crowded. This is why shophouse apartments have a great advantage in terms of internal guest and less volatility. This is a good guarantee for the business or rent. See also: How to price apartments for investors.
Second: Limited number. Shophouses usually have very few, accounting for 2-3% of medium-sized condominium projects and 5% of large urban areas. Because the quantity is not much, plus the location is favorable so this product is often not enough to meet the huge demand of the market. Being positioned as a rare commodity is a great advantage of this type of merchant.
Third: Intelligent design in the direction of multi-function. The shophouse area has a separate business and residential area, so it is convenient for business. In addition, this type of apartment can also be used as an office. Thanks to its integrated function, the shophouse attracts both individual and institutional investors (many businesses).
Fourth: Convenient and easy to reach from many directions: The parking lot for customers is the most difficult problem for shops and shopping. Shophouse has the advantage of having spacious parking spaces in the outdoors or in the basement of the apartment, facilitating the movement. Both external visitors and guests inside the building can access the shops quickly.
Fifth: good liquidity. Owning a multi-functional shophouse apartment, prime location, limited number, investors are not concerned about the liquidity of the property. With commercial functions excellently, apartment facade commercial easy to buy, easy to rent
Sixth: High rental income. The rate of exploitation of shophouse apartment is about 8-12% per year. The money flow generated by this product gives the owner higher rental performance of the apartment, sending the bank less risky than gold or stock.
Seventh: More opportunities to increase asset value. With the high occupancy rate, the residential community in this area will be more and more likely to generate demand for trading and service development. At that time, the value of shophouse was higher than that of commercial apartments.
Risks when buying a shophouse apartment
Prior to investing in a shophouse apartment, what would investors be interested in the risk of this product line? Here are some of the risks investors may face:
Shophouse price is higher than the price of the apartment: Shophouse is a specific service product line, the price is higher than at least 20% or more than the price of the same apartment building. In particular, there are super-projects to shophouse prices double the price of apartments. At this price, investors will be very anxious about liquidity.
With its two-storey product line, Shophouse, the price is obvious. However, investors need to carefully consider the potential of the project to make the best investment.
Shophouse has only 50 years of use: Most shophouse apartments have a lifetime of house space and a 50-year shop area. This is also a barrier that many investors are concerned about when planning long-term investment.
If you are a surfing investor, this is not a serious problem. But if you invest long distances, please read the commitment of the investor, because some projects the owner committed to extend the extension of 20 years of use.
Risk of handover progress: Unlike apartment investment, the risk of handover progresses to the Shophouse product line has serious consequences for long-term investors. Investors who have been delayed by the project for several months may cause the investor to suffer heavy losses on alternative maintenance, business or rental income.
Therefore, let’s find out about the project owner’s financial strength and the quality of the project … to study the previous projects invested by this investor. Are there any projects that are slow to progress? How long is the delay? Commitment to progress like?
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