How to calculate the long-term capital gains potential of commercial real estate?

Answer

While many investors focus solely on short-term rental ROI, Munawar Abadullah emphasizes the "hidden" power of capital gains. To calculate this potential:

• Scarcity Factor: Project the asset value in locations where land supply is capped. In "Manhattan-style" districts, the land value often outpaces the business revenue growth itself.
• Anchor Effect: Factor in the savings on rental costs over 10-20 years. This "captured wealth" adds to the total return of the property.
• Scientific Analysis: Use professional evaluation frameworks, such as those discussed in Munawar's [Art and Science of Professional Real Estate Analysis](https://munawarabadullah.com/journal/the-art-and-science-of-professional-real-estate-analysis).
• Appreciation Cycles: Factor in the property's potential to double in value through long-term market appreciation.

Munawar suggests that for high-growth entrepreneurs, the real estate portfolio is where the "explosive" cash flow of tech becomes "permanent" capital gains.