One of the main factors one should consider in order to successfully manage property is balancing the cost of borrowing against return. Recently, studies have shown that the global economic recession has led to the plummeting of prices of commercial property in London by as much as 44%. This is because the cost of borrowing to maintain such property is very high when compared to the low returns being achieved.
These prevailing conditions mean that commercial property owners have been forced to continually reduce their rent rates in order to attract potential tenants. Many commercial buildings have therefore been left empty and small businesses and private investors have taken advantage of this situation and are purchasing commercial property at a very high rate.
In addition, those who are not purchasing commercial property in London are leasing these properties or simply renting space which they previously couldnt afford in order to take advantage of the prevailing business environment in the city. Many of these small businesses are looking at their investment in commercial property as a long term one since once the recession ends, the economy will pick up again and the property values will rise with it. At such a time they will see great returns on their initial investment as rent rates are going to increase and property values appreciate greatly.
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