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Interest Rate Will Be Kept Low

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Investors who bet on interest rate to go up from last year have lost out on a good year of commercial and industrial real estate investments capital gain and rental yield.
Remembering about the same time last year, I have an investor who said he is not investing because he agreed and is very confident that interest rate will rise soon. One year has passed and interest rate is still kept low. I think he has lost out quite a bit. I spent time explaining to him that it will be in the interest of USA for rate to be kept low but he thought otherwise.

Janet Yellen had said earlier that they will raise interest rate in the second half of 2015. Indeed, her latest indication is that she may want to keep interest rate low for the whole of 2016. Also, in Europe, ECB has adopted negative interest rate. Looks like the whole world wants to keep interest rate low. I strongly agree that the interest rate will still be kept low for awhile and when it rises, it will do so slowly.
What's next? Standing on the sideline for the next 1-2 years? Investors are already restricted with residential property investments due to the cooling measures. Of course, investors will and can continue to invest in other investment vehicles like commodities, equities etc. However, missing out on the real estate investments may not be the best because there are still plenty of opportunities in the commercial and industrial segments. There are still commercial and industrial investments with rental yield above 5% and 6% respectively excluding capital gain.
However, it is essential to learn how to invest in commercial and industrial investments before plunging. Majority of investors are more familiar with the usual residential investments which are very different from commercial and industrial. Thus, getting familiar with commercial and industrial requires proper guidance and training.
In view of the commercial market, the star performer this year should be the office sector. Office rental is increasing fast. CBD Grade A offices are enjoying a record high of about 97% occupancy. With rental expected to rise further, returns will rise in tandem making it attractive for investors. Also, office investments have lower barrier to entry. An investment budget (cash and loan) of about S$1 million will find you a good small office in CBD making it easier for investors to bite.
In general, commercial and industrial investments will continue to do well for the rest of the year.


This article is contributed by: Asia Wisdom Group

Asia Wisdom Group and its related companies are focused on real estate businesses. We are a boutique real estate services provider specializing in commercial & industrial market. Our group businesses and services are evolved around the core competence of commercial & industrial real estate investments. The group fills the vacuum in the real estate industry of commercial & industrial.

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The founder of the group has trained thousands of investors and practitioners in the area of real estate investment, particularly in commercial & industrial. We cover many aspects of commercial & industrial investment training with various programs catering to investors, practitioners, agents, industry players and stakeholders.

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