What is Commercial Real Estate Property and Its Status in the Global Context?

Real Estate

The commercial property, popularly known as income or investment property or commercial real estate means land or buildings which generates profit basically in two ways, either by rental income or by monetary gain. There are different types of commercial properties which include residential or office buildings, hotel complex, medical premises, shopping malls, advanced agricultural farming land, retail shops and stores, garages and warehouses, military colonies and official buildings. Often, massive residential properties divided into certain units and well arranged for commercial purposes are given on rental basis or on borrowing. Get associated with Forum to avail your intended spaces towards enhancing your business or profession.

The commercial property or commercial real estate business has grown enormously in recent times. The overall contribution of the commercial real estate business to the economy of entire Europe in 2012 was estimated around £285 excluding the social benefits. Besides this, as per INREV and EPRA estimation, around 4 million job opportunities were generated by commercial real estate business across Europe.

As per authentic statistics, the value of commercial real estate business in the United States was around 6 trillion USD in the year 2018. This estimation was measured and studied by the US commercial real estate index.

However, the commercial real estate business has many drawbacks in terms of its business growth and in relation to its contribution to the world economy. As per the real capital analytics, a real estate research firm in New York, maximum of commercial real estate properties with a total value of 160 billion USD in the US are in the state of either foreclosure, default or bankrupted.

In the case of Europe, the entire commercial real estate business has a debt of 960 billion euros mainly backed by the European Commercial Real Estate. In order to strengthen and run the commercial real estate business further in Europe, at least half the amount of this debt must be given in refinancing within the next 3 years. This factsheet and estimation were worked out and published by the famous UK based commercial real estate news provider “PropertyMall”.

There are speculations that the commercial real estate business may face massive dislocation in the world market due to the future interest rate hikes in the world economic conditions that would generate new pressures on the valuation of real estate properties, impede debt-related servicing and complications in loan refinancing.

In spite of the various pros and cons in the commercial real estate business, the business is growing enormously because the needs of the consumers are abundant and they require the commercial real estate to continue to support their requirements.