All about commercial real estate

What is commercial property?

Commercial property is premises or separate buildings that are not related to dwelling stock, but are used for doing business and making money.

They predominantly buy non-residential property in Kyiv for one of two purposes:

1. Running your own business. Commercial premises can be used as an office, warehouse, or a shop. Despite the fact that many entrepreneurs conduct their business through the Internet, the demand for commercial real estate remains quite high. The choice of an object largely depends on the purposes that it is bought for. For example, in residential areas, commercial real estate is mainly for opening shops, pharmacies, beauty salons, etc. When it comes to an office, downtown and business districts are the best choice for office space.
2. Investments. Real estate has always been and remains one of the best ways to invest money. There are several ways to make money in commercial real estate. The most obvious is to buy a room or a separate building and rent it out. This gives you a stable income. Problems with finding tenants are quite rare, especially if the object is located in a passable place near the metro station.

Another way to make money is to profitably resell the object. You can buy an abandoned building, make a good repair in it, have it put on to the water mains, replace electrical wiring, improve the facade and the area nearby. After that, such an object can be sold at a good margin. Many investors still often divide one object into several premises and rent them out to different tenants, which, accordingly, increases income.

Types of commercial real estate

There are different types of commercial real estate:

• Retail real estate
• Office real estate
• Catering facilities
• Storage and sorting rooms
• Industrial real estate
• Hospitality industry
• Tertiary sector
• Gas stations, service stations, garages, car washes
• Asset complexes, etc.

Where and how to choose?

When choosing commercial real estate, first of all, it is necessary to consider for what purposes it is purchased. For example, if you want to open a store selling children's toys, then you need to choose areas with a large concentration of families with children. Downtown is not the best option. It had better be prestigious residential areas where families with medium and high incomes live.

If you are going to open a boutique, separate buildings in the city centre or premises in shopping and entertainment complexes are usually suitable for this purpose. For offices, they mainly choose the first floors of multi-storey buildings if they are looking for a budget option, or full-fledged office buildings.

Commercial real estate in new buildings in Kyiv is sold at quite affordable prices, especially if you make a deal at the groundbreaking stage. In this case, after putting the house into operation, the cost of such an object may increase by 20-50%, and the investor will already earn money without actually doing anything for it. When choosing a new building for the purchase of commercial real estate, it is better to give preference to residential complexes from trusted developers. For example, Nordica Residence or Ok'Land.

If you are purchasing commercial property as an investment, keep in mind that buyers and tenants pay attention to the following points above all:

• Favourable location, including distance from the city centre;
• Total area of the premises and layout;
• Competition in the chosen area;
• Adjacent structures;
• Object price or rental cost;
• Prospective clients;
• Condition of the property.

Registration process

The process of registering commercial real estate is perhaps the most responsible. Unfortunately, cases of fraud in Ukraine have become more frequent, so you have to be very careful when buying any commercial property. You’d better seek competent lawyers’ specializing in real estate transactions legal advice.

The main factor in the successful and profitable acquisition of commercial real estate is its clean title. If you do not take into account various subtleties and do without legal support, this can result in undesirable consequences, including litigation and loss of property. Here are just a few of the risks:

• Incorrect registration of title or lease agreement;
• The seller’s lack of real estate title;
• Disputed property;
• The need for unplanned additional investment in real estate;
• Nullification of a sale and purchase transaction;
• Third parties’ ownership claims.

It is not recommended to draw up a sales agreement on the basis of normal documents that do not take into account the features of a particular object. Also, before buying, you should carefully check the object and its owner, look through the title paperwork. It is worth making sure that the property is not pledged to the bank and there are no litigations. If you purchase an object directly from the developer at the groundbreaking stage, it must be a reliable developer who has already put into operation more than a dozen objects. In Ukraine, you can fully trust several developers, and one of them is RIEL Real Estate Corporation.

The ideal registration process for non-residential property should be as follows:

1. Search and selection of a suitable object. Non-residential real estate in Kyiv is presented in large quantities, so usually the choice does not take much time.
2. Checking the object and its owner in various registries.
3. Drafting a sales agreement to protect your interests.
4. Concluding the agreement and registration of title for commercial real estate.