Is The UK Still The Top Global Location For Commercial Property Investors?

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 Brickvest 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 commercial property investors. The Brickvest
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.