In the world of real estate; there are two major types of property to be concerned with. These are residential properties and commercial properties. Residential properties are live in spaces often found in hubs called communities or societies as a whole. On the other hand; commercial property are the ones which are used for running business operations. The most common examples of commercial properties are that of a grocery store, an electronic store, stationary store, a meat shop and so on

Investors who are well versed in the real estate industry recognize the importance of both of these property types extremely well. Whereas residential properties can be bought in business to flip or be put up for rent; commercial properties are usually rented out to other business owners to obtain a sizable amount of rent. There really isn’t one that is better over the other; the demand of residential properties is increasing by the day and commercial properties to provide to the residential areas with convenience are also increasing. Commercial properties allow for an opportunity for small businesses a platform to grow on.

Sometimes in the field of real estate investors in one type of property might be wanting to convert their commercial properties into a residential property. Why is that so? Depending upon the situation it can potentially bring along a lot of benefits for the investor themselves. This change of pace can potentially change the opportunity and exposure a former commercial property within an area can get. For example take the case of a business owner that has a standalone commercial property in the midst of residential community; and they struggle to find tenants or business owners to put it up for rent; in this case transforming the commercial into a residential property to make it blend into its surroundings is the best course of action.

Can you convert commercial property into residential property?

One of the most frequently asked question is that whether such a drastic conversion is even possible… the answer to this can be yes or no and is situation dependent. The first obstacle that determines whether doing such a conversion is even lawful or not is the guidelines and law concerned with that area. When a society or part of land is being planned for urbanization often they will include separate areas for commercial property and residential property to be built upon. An example of such planning can be seen in big projects like DHA and Bahria town which are spread all across the twin cities. Since it is pre-determined you will not be able to convert your commercial property into a residential one.

Consider another case; as we discussed the example of a mixed society with commercial properties and residential properties intermingling closely; the chances are that there wouldn’t be strict restrictions on inter conversion of commercial type properties into residential properties on this area. The answer to the question greatly lies in zoning laws and local laws of the area which is concerned.

Converting commercial property into residential property: obstacles and considerations:

First course of action is to check whether this act is legal or not; e already discussed the importance of laws above; so move onto the newer aspects of what needs to be considered when you are making a property conversion.

Commercial property and residential property are quite different:

You would think; “well obviously!” however when you are converting the property between two types you truly see the fine print of how they differ. Commercial properties by their inherit nature are placed near areas of heavy traffic and public commute. On the other hand the residential properties are placed in gated enclosures with neighborhood that expects a peaceful and quite life. A shop can be operated within 1 room and maybe a small attached bathroom whereas a residential property is built specifically with the needs and requirements of residents in mind. You will have to modify the structure and pay up the extra construction costs that will be involved within the conversion process.

Keeping finances in check:

real estate industry is all about smart management of your finances. Investment versus returns is the crux of this field. Whether you are building a property, selling it, buying one or renting it; management of your finances and investment is going to be critical. Financial planning is highly valued by the top investors of this field. We cannot ignore the importance when we are making such a niche investment in the conversion of a commercial to a residential property.

A smart investor will always try to keep their money in check while investing in any project. The construction costs such as adding another story atop of this commercial building or modification costs like adding in a gate, a garage, separating the hall like form into different rooms are most likely expected. This investment is usually heftier than small improvements made on property before selling it; that is why it is quite important to have it planned and weigh the ups and downs of the investment you are going to make other than diving in head first.

It is not for everyone:

Another big question is what is the attention your property going to gain after the conversion. It might seem tempting to convert a commercial property into residential one considering it will yield better results due to the higher demand however such converted properties are not going to be for everyone.

Take the example of a posh house being built in a commercial sector by the main road; however the house itself exudes luxury it might not be for anyone who wants a luxury living experience. Consider he traffic flow that continues on 24/7 around this property. Moreover think of the property sticking out like a sore thumb amidst of a commercial hub… it might not provide the luxury living experience given the settings.

On the other hand if you establish a converted commercial to residential property in a residential hub; the leftover traces of its past as an operational commercial property might stick out to people. Especially when a single converted property is sitting amidst of rows upon rows of well constructed residential properties.

These properties however will have a market and a target demographic. Consider a bunch of students who want to rent out a living space in a residential area might be attracted towards such converted properties. Moreover consider people who cannot afford the rent of proper well built houses might want to consider moving into a converted property. In case someone is looking for a house with a comfortable layout for a home office; such converted properties can provide really well.

Plan smart for the improvements:

These type of projects do not have to be rushed within the span of a few months. Since you are going to work on a project that has already been deemed finished at a time in past; this could take time. You first and foremost do not need to hurry about this.

Make great use of the previously provided layout of the house; so that the rework costs can be kept low and the project can be convenient to work on. You can hire architect and construction experts and get their opinion since these spaces can be tricky as compared to a residential property being built from scratch.

Try to make the new layout seem spacious and less clustered as you divide the large spaces into rooms. Natural lighting can play a very important role in this regard. Always uphold a professional opinion and keep listening to good advice as the project is in the works. Reconsider and confirm that the layout plans are going to be up to high standards and do not compromise the safety of future residents in case there is a new stairway or partitioning wall being built.


The process of converting a commercial building into a residential building can be quite intimidating and frustrating to get into. Consider the process of getting permissions, making improvements on a property that is comparatively more difficult to work with. It is important to stay level headed and plan throughout the way. Keep in mind for what purpose you are transforming the property and what the future will field for you.

In your case converting a commercial property into a residential one might be extremely ideal to go forward with however it can backfire quick. Improper improvements, slacking to getting proper permissions to build here; not considering expert opinion and advice can make these projects a money pit which might put you at a loss.

To sum it all up in a single sentence; planning is the key to success in real estate matters. Especially when it comes to a niche and tricky job like converting properties.