Whether you want to invest in commercial office space, retail, warehouse, or another type of commercial property, the first step is to understand factors affecting commercial property value. All investors want to know is how to get better returns for their money and the factors that will affect the value of their investment going forward. There are many factors that come into play, ranging from location to transport links, local amenities, and property characteristics. We have broken down some of the crucial elements that can impact the commercial property value.
One of the critical factors affecting commercial property value is the location, including the transport links in the surrounding area. Infrastructural development within the surrounding area is one of the most important factors which influence real estate valuation. The average price per square foot in Business Bay is AED 589, which is higher than the average price per square foot in Barsha Heights, which is AED 579.
The presence of transport links and other facilities in the vicinity of the property helps increase the property value, and as such the valuation of properties with better infrastructure capabilities and modern amenities are generally higher than those which fail to provide it. Access to transport is another crucial aspect that can affect the value of your property considerably. The more modes of transportation that your unit is connected to, the higher the value will be. The more popular and accessible your property is, the more valuable it will be. Take, for example, an office space in a key business location such as Business Bay. The area is well connected to Dubai’s key arterial roads, has access to the Dubai Metro, and has many bus stops within the district. This will have a higher value than an office in a remote area with very few amenities.
Depending on the preferences of your employees, some amenities will more important than others. Supermarkets, restaurants, cafes, and other retail establishments in close proximity to your unit will help increase its value. Other facilities such as clinics or hospitals can also affect the value of the property. Further to this, the plot type that the unit is built on will also affect the property value. Buildings that are constructed on freehold land tend to command a higher valuation than those on leasehold plots.
Generally speaking, the larger the property the more valuable it will be, with larger spaces commanding higher prices. With that being said, whilst your unit may cover a large amount of square footage, this is only useful if the space is actually usable. A good way to optimise your property’s value is to ensure that all available space is utilised. This might mean changing the configuration of your unit and opening up areas so there is more room and space for the end-user to conduct business.
The type of buyer for your property can help determine the value of your property. You should consider who your property will be best suited for and if there is a high demand from these users. As such, where possible, you should optimise your unit so it is best suited for the type of end-user you are trying to attract.
Commercial property that doesn’t have the functionality to meet current market demand, will have the potential to be unable to satisfy potential end users and therefore be less valuable. If your unit is designed to be used as an office, then as the owner, you should ensure that the space can function as an office space.
The quality of the building also plays an important part. A brand new, modern building, will generally be valued higher than a run down unit that has not been kept up well. Pay attention to building ratings, and how your asset compares to other similar properties in the area. This follows on to make sure that your property is well maintained. The asset should not just be visually appealing but should have a well-maintained interior and exterior. Those first impressions can be critical even when it comes to securing a viewing. Minor improvements such as painting and deep cleaning can be very effective with small capital expenditures.
Any upgrades to your unit would be welcomed by potential buyers, especially if they improve the property’s potential to make a higher profit. What’s more, there is an increasing number of companies that are making it a goal to be more environmentally sustainable. As such, making environmentally concise improvements can increase the value of the property by reducing operational costs. This could be as simple as insulating the property and switching to efficient light bulbs. If you are looking to attract large companies, more of them will have corporate social responsibilities and will only occupy energy approved assets. With that being said, whilst making improvements can make your property more attractive and drive the price up, cost does not necessarily equal value, so plan carefully what and how much you spend on improving the unit.
Smaller improvements such as a fresh lick of paint, fixing any minor repairs, doing a professional clean, including carpets, will all make your property more attractive to potential buyers and do not cost a lot of money. However, first impressions do count, so both the interior and exterior of your property should be well maintained.
Paperwork and approvals
Another major factor that can affect the value of a property, is whether you have all the necessary paperwork. Do you have your licenses in place? Have you got all your approvals? What’s more, a property that has planning permission to extend or make any significant changes will also improve the value as it will enable greater opportunities for the unit.
Whilst these are all factors that can affect the value of your property, it is worth noting aspects of your unit that will not be included in a valuation. Generally speaking, a valuation will include all non-moveable assets within the property, such as the size, layout, specification, condition, and views. A valuation will therefore exclude furniture, plants, machinery and any equipment within the unit.
As you can see, there are many factors that come into play when determining the value of a commercial property. If you require a thorough and comprehensive valuation report, contact us today to book a consultation with one of our valuation experts.