While there are numerous investment options to choose from, more and more are keen on investing in an industrial estate. Industrial estates offer long-term cash flow and less market saturation risk. If you’re planning to invest, you might be wondering if now is a good time to do so. We’ve rounded up five reasons to invest in industrial estates during COVID that you may want to consider.
There’s no doubt that the pandemic had caused drastic impacts on people’s finances around the world. Yet surprisingly, there are a few who recognize the many opportunities of investing in industrial estates right now. Read on.
Higher Diversity Means Higher Stability
Industrial estates refer to properties used for industrial purposes. This can include infrastructure for production, assembly, warehousing, storage, logistics, and other industries in the economy. Some of the most common types of industrial properties include:
- Manufacturing facilities
- Research and development
- Storage and distribution centers
- Flex-space or multi-tenant properties
- Industrial parks
In commercial or residential real estate, a property that falls into a specific category must be used only for that particular purpose. For example, an office space cannot be used as a multi-family property. In the same way, a multi-family property cannot be used as a retailing facility. Investing in industrial estates grants you higher diversity, translating to higher stability.
It’s simple. An industrial estate can be used for a wide array of activities such as logistics, storage, and manufacturing. This means, that even if the demand for manufacturing facilities is low but high for logistics, the property is flexible enough to be advertised as either. With its multiple potential uses, investors can curb shifting demands.
COVID-19 has also upended long-standing consumer habits across the world. While products like canned goods, hand sanitizers, and face masks are deemed as essentials, other products like gadgets are not. The demand for certain products skyrocketed, while the demand for other products fell and forced business owners to suspend operations.
Remaining agile and flexible is the key to industrial success. Investing in an industrial estate is appealing because it has multiple uses. You can easily accommodate in-demand tenants to ensure your investment remains stable.
Stable High Demand
Investing in an industrial estate is popular because it remains a high-demand asset.
Due to their adaptability, industrial estates tend to have lower rates of vacancy than other types of commercial and residential estates. The demand for industrial estate stays high all the time because every product you see today passes through some type of industrial property. Industrial properties produce goods that are indispensable for daily living.
At the height of the pandemic, demand for industrial properties, such as large-scale fulfillment centers and warehouses, was high due to more and more consumers shifting to e-commerce. Online retailers needed to stock up on more goods because of their broad online product lines. They also needed extra distribution space to sort, package, and ship goods to the end consumer.
Many companies are also looking to produce and hold bigger inventories. Industrial estates are types of properties that can house massive inventory facilities. As a result, investors are more likely to benefit from the crisis brought about by COVID-19 than investors in the commercial and real estate sector.
Hassle-Free And Long-Term Passive Income
Compared to other types of properties, tenants of industrial properties sign longer leases. Instead of picking up and relocating often, the lease of industrial property tenants can range between 3 to 10 years or more.
The longer the lease, the more hassle-free you can gain income as an investor. As long as your industrial estate remains occupied, you will have long-term passive income.
Less Market Saturation Risks
There is less chance of market saturation among industrial estates, meaning an oversupply is a near impossibility.
As long as consumers are buying products of any kind, there will always be a need for industrial properties that manufacture, distribute, and ship goods. This makes industrial estates a much safer investment option at any time.
Industrial estate investments are relatively much easier to maintain compared to residential and commercial investments.
With commercial and residential properties, there will be repairs, renovations, and upgrades needed. All of which can be costly and time-consuming. With industrial properties, however, tenants are typically in charge of maintenance issues themselves.
There are plenty of reasons to invest in industrial estates during COVID. With long-term leases, fewer market saturation risks, less maintenance, and stable demands, investors are set to reap better ROI.
If you are considering investing in industrial real estates, contact Science Park of the Philippines to learn more about the best choices to make!