Commercial News

Five mistakes to avoid when buying commercial property

Buying commercial property is a long-term commitment and a major investment for any business, therefore, such a decision needs to align with the businesses’ growth objectives, according to Attie Anderson, FNB Head of Business Lending.


“Being in a position to buy commercial property is an exciting phase for a business as this creates new possibilities. In some cases, commercial property buyers make impulsive decisions based on emotions rather than sound business objectives. During the decision-making process, it is important to remain focused on business needs and not overlook the finer details which could have long-term limitations on business growth,” he says.


Anderson states that paying attention to some of the following areas could help commercial property buyers avoid costly mistakes:


Commercial use, title deeds and town planning restrictions

  • Ensure that the property is zoned for commercial use and investigate any potential town-planning restrictions for the chosen area. This will give you a good sense of whether your business could face growth restrictions in future.


Size of the property must accommodate business growth

  • Depending on the type of business, you need to consider the business’ growth potential and whether the targeted location could accommodate such growth.  It is not advisable to buy property to only sell a few years later because you could potentially lose money and sourcing new property comes with additional costs such as agent’s commission and transfer costs.

Location and accessibility

  • A location might be better-suited to the business but not necessarily convenient or accessible to employees or clients. This could be detrimental because you could end-up investing more resources in transport or losing talent due to the inconvenience of the business location. Similarly, you want to ensure easy accessibility for your clientele since this has a direct impact on the future of your business. There needs to be a fair balance.

Do not overpay

  • The objective of every property seller is to make substantial profit from the sale of their property. This is why commercial property buyers need to understand and research the potential value of their targeted property and negotiate a reasonable price. Banks also play an essential role in this regard because they use independent property evaluators to ensure that the buyer has a good idea of the property’s value.

Understand upfront and ongoing costs

  • Similar to buying residential property, there are upfront costs that need to be settled by the buyer during a commercial property transaction. These include transfer and/or registration costs, and these largely depend on the sales price.

“Acquiring commercial property is a significant step in the life cycle of any business and it is important to ensure that all factors are taken into consideration. Business owners should enlist all the necessary help to ensure that they make the right decision, especially in view of the long term nature of property investments,” concludes Anderson.