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Differences Between Residential and Commercial Real Estate

There are many differences between between residential and Commercial Real Estate. In this blog we are going to define what is residential real estate and commercial real estate, their types and factors to consider when buying a house or  building a house for any of the purposes.

Residential real estate refers to properties that are designed and used for dwelling purposes. This category includes a variety of housing options, such as houses, condos, and apartments.

While Commercial real estate encompasses a broad category of properties that are used for business and commercial purposes. The main types of commercial real estate include office buildings, retail spaces, and industrial properties.

Types of Residential Real Estate

  1. Houses:

Detached Houses: These are stand-alone structures that do not share walls with neighboring properties. They typically have their own land and offer more privacy.

Semi-Detached Houses: These houses share one common wall with a neighboring property. Each unit is a separate residence with its own entrance.

Townhouses: Similar to semi-detached houses, townhouses are usually multi-story units that share walls with neighboring units. They are often part of a larger complex.

Mansions: Large and luxurious residences often characterized by their size, elaborate designs, and extensive amenities.

  1. Condos (Condominiums):

Condos are individual units within a larger complex or building. Unlike apartments, condominiums are usually owned rather than rented. Owners share common areas, such as hallways, elevators, and amenities, and contribute to the maintenance and management of these shared spaces through homeowners’ associations (HOAs).

  1. Apartments:

Apartments are typically rental units within a larger building or complex. Tenants pay rent to a landlord or property management company. Apartment buildings can vary in size, ranging from small structures with a few units to large, high-rise complexes. In Nigerian parlance its called blocks of flats.

  1. Cooperatives (Co-ops):

Co-ops are another form of residential property ownership. In a cooperative, residents own shares in a corporation that owns the entire property. This is not too popular in Nigeria but we have few housing cooperatives organized by Government workers in some Ministries and Parastatals.  Residents have the right to occupy a specific unit, but they do not own the unit itself. Monthly fees cover the mortgage, property taxes, and maintenance expenses.


Types of Commercial Real Estate.

  1. Office Buildings:

Office buildings are often classified into three categories—Class A, Class B, and Class C, this is based on factors like location, amenities, and building quality.

Class A: These are high-quality buildings with prime locations i.e. strategically located in the heart of the Town with modern amenities and professional management.

Class B: These are older or less prestigious buildings that still offer functional space and may be more affordable.

Class C: These are older buildings with basic amenities and in need of renovations or repairs. Some of these dilapidated buildings begging for renovation.

Single-Tenant vs. Multi-Tenant: Office buildings can be single-tenant, occupied by a single business, or multi-tenant housing multiple businesses.

High-Rise vs. Low-Rise: Office buildings can be high-rise skyscrapers or low-rise structures, depending on the location and purpose.

  1. Retail Spaces:

Retail spaces include shopping centers, malls, strip malls, and standalone retail stores. Larger retailers known as anchor tenants often attract customers and other businesses to a retail property.  Eg Banks attracts other businesses to service the Bank staffs. The success of retail spaces is often influenced by factors such as location, visibility, foot traffic, and nearby demographics. As an investor, if you want to set-up a retail space these afore-listed factors must be considered.

  1. Industrial Properties:

Industrial real estate includes warehouses, distribution centers, manufacturing facilities, and research and development (R&D) facilities. in building an industrial house, proximity to transportation hubs, highways, and distribution networks is crucial. Industrial properties must comply with zoning regulations and land use restrictions, which vary from State to State.


In conclusion, Residential real estate is a significant component of the real estate market, and factors such as location, size, amenities, and market conditions can influence the value and demand for these properties. Buying or renting a residential property involves various considerations, including budget, lifestyle preferences, and long-term investment goals.

Whereas in Commercial real estate transactions and investments are influenced by factors such as market trends, economic conditions, and the specific needs of businesses. Investors and businesses consider factors like lease terms, location, and potential for future growth when engaging in commercial real estate activities.

As an Investor you need to invest wisely and put all these factors mentioned above into consideration before buying that house or constructing that building.

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