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Top Things That Can Make Your Commercial Property To Depreciate

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Ten-X Commercial
Top Things That Can Make Your Commercial Property To Depreciate

If you want to invest in commercial properties for sale, it is important to understand that your property will reach a point where it will start depreciating. The importance of property depreciation is known to advisors, investors and appraisers working in real estate markets. This means that depreciation is a key input to pricing models of real estate property and has a very important effect on the performance and management of real estate. Some of the previous research in this area has identified things that cause depreciation. Other pieces of research have concentrated on the measurement of the impact of depreciation on capital and rental values but few studies have tried to put together both the two strands of research and identify the impact of different causes.

There are a few factors that could be causing large variations in property depreciation. One of the obvious factors is that the property may be of different ages. Old buildings might be susceptible to deterioration than new ones and may be more vulnerable to obsolescence shocks in terms of user requirements, changes in technology and building regulations.

It is difficult to observe a clean pattern in property depreciation as the building continues to get old; while deterioration can be relatively predictable. The impact and sources of obsolescence are harder to estimate. It is clear that the age of the building should have an important influence on the depreciation rates of a building.

The location of the building

Before you buy commercial properties for sale online, it is important to consider the location of the building since the location will determine whether the property will appreciate or depreciate in the future. If you buy a property in an area where terrorism is becoming common then you should expect the value of the property to deteriorate with time. No one will want to rent your property since people will be moving out of that area. Another example is when the area doesn’t have proper leadership and management. This will cause infrastructure in the area to deteriorate and make the property to depreciate in value.

The market conditions

The wider market conditions are important as they influence the supply and demand of buildings. It is important to know the interaction between rents, a strong economy and the development of pipeline in the area. These factors have an impact on the relative performance of the older and newer stock.

Maintenance

Another factor that you can have control of is maintenance. Maintenance largely affects the depreciation of your real estate property. If you do not maintain your property, it will wear out. It will have leaking plumping systems, spoilt floors, fungi and mildew and even structural damage. This means that poor maintenance of your property will make the property depreciate at an increased rate.

The design

If the design of your commercial properties for sale is likely to be unpopular in the near future then you should expect your property to depreciate. It is therefore very important to consider designs that are likely to be popular in future when buying commercial properties for sale.

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