This is a big question all over the world given the autumn 2008 global financial crisis that left many investors wondering just how beneficial it is to invest in commercial spaces in the UK with many still sceptical about the whole idea. So is the UK Still the Top Global Location for Commercial Property Investors?
The Brick vest Barometer
During the final quarter of 2017, investors saw a decline in commercial spaces investment in Germany from 34%- 23% while the UK saw tremendous growth from 27%-29% making it the top global location for investors. The Brick vest barometer indicated that with the fall of Germany to second place, UK took first place with the US taking third place and France fourth place with 19% and 18% ranking respectively.
The report also found that secondary cities such as Manchester as well as Birmingham showcased improved performances in terms of popularity and performance. This fact proves that even though commercial spaces come at a premium in capital cities, investors can still gain value when they invest in regional parts of the UK as well. The interest in the investment in secondary cities has steadily grown from 37% during the third quarter to 41% during the end of 2017.
Shawbrook Bank Annual Barometer
The Shawbrook bank annual barometer also channelled a positive outlook in terms of commercial spaces investment, showcasing confidence of 78% in terms of the lending environment despite Brexit from 72% in the year 2017. The hunt for income was rated highest at 38% as the priority primary investment objective for investors in the last quarter. This fact, therefore, sees it rise to 32% with 6% during the third quarter of 2017. Despite the many uncertainties that come with PRA changes as well as Brexit, the positivity showcased by commercial mortgage brokers is quite encouraging.
Why invest In commercial property In UK
During the financial crisis that occurred globally, the UK commercial spaces suffered a depreciation where prices dropped by about 44% from 2008-2009, but this has since changed, and investors have now witnessed a sparking growth in the value of investing in commercial properties for sale. Andrew Milligan, who heads the Standard Life Global strategy strongly, believes that commercial spaces in the UK will yield higher returns compared to shares in the future.
Longer lease structures
In comparison to many other countries, the UK employs a more extended lease structure, which is highly beneficial as it gives investors more solid security in the long term.
Higher rental return
Commercial property in the UK showcases a higher rental performance compared to residential properties due to their nature and potential size as well. Additionally, over some time, there will be an increase in the overall value of the property.
Sensitivity to market trends
Direct ownership of property in the UK is a highly tangible asset and can quickly be reviewed, renovated as well as redeveloped as the market shifts offering investors better control at handling occupier needs as well as changing trends.
Maintenance and repairs
Generally, in the UK, tenants handle maintenance and repair costs on their own, and this is achievable through FRI lease or full repair lease. Investors are advised to choose tenants that are financially strong and reliable and have an excellent reputation that will not default on repair and maintenance during the tenancy.