Investing in commercial real estate in Lagos is a great way to build wealth. Commercial real estate investing, in particular, is known to provide some of the highest income streams.
If you are an investor searching for yield-generating opportunities as well as a means to further diversify your portfolios, investing directly in commercial real estate is a way to achieve both goals, but it also provides a lot of other benefits which include but are not limited to the following:
- Income Stream: Investing in a stabilized real estate asset provides investors with steady, day-one rental income while also offering the potential for long-term capital appreciation. These rental income streams are commonly used to cover everyday living expenses for retirees or as supplemental income for those that have more volatile primary income streams. Others prefer to recycle the cash and invest it back into their portfolios. Because rental income is typically scheduled out in a lease, the cash flow generally has less volatility than other investment options.
- Capital Preservation: Real assets such as shop buildings have observable, tangible value. This value is determined primarily by the quality of the building, the location, and the credit of the tenants in place, and these factors are not volatile. Shares in a publicly traded company, on the other hand, can drastically change in value overnight due to a variety of micro and macroeconomic factors. That potential for volatility makes investments in real assets a much safer option for those whose primary concern is the preservation of capital.
- Diversification: Commercial real estate investments have historically had a relatively low correlation with the stock market, which makes real estate a natural option for portfolio diversification. This low correlation is key as it protects your portfolio from significant loss due to a singular event. Additionally, in recessionary periods, stocks and bonds become increasingly correlated; holding investments in other asset classes helps increase your portfolio diversification in those times. While diversification does not guarantee there won’t be a loss, it is an important component to minimizing your total risk and achieving your long-term financial goals.
- Hedge Against Inflation: Simply put, a hedge is a “just in case” — something that usually moves in opposition to the market, or isn’t subject to wild fluctuations. Hedging is considered part of a diversified portfolio because it can potentially help minimize losses if the market takes big swings in reaction to events like inflation. Real estate is the ideal investment since it has the potential for capital growth and keeps its core value even when inflation is high.
- High Yield Potential: Investors searching for stable yield opportunities generally look to the bond market, which has generated an average return between 5% and 6% since 1926. In comparison, direct commercial real estate investments can achieve average yields as high as 13-14% while still providing many of the same benefits that bonds do.
Looking to where to start your commercial real estate investment journey or portfolio diversification? Start with Chemical Plaza Ojota.
Chemical Plaza comprises 3 floors of 240 individual lockup shops with estimated +10,000 daily walk-in customers.
We have a very flexible payment structure starting from 200k per month for 36 months. This makes it easier for an average investment-minded person to own a shop within the plaza.
At completion, the plaza will be equipped with – an adequate toilet facility, 24/7 security, car parking management, a central water system, waste management etc.
Get in touch with Casafina Development Company Ltd.
For more educative content investment and wealth building tips, check out our youtube channel