New figures have proved to Simon Morris that UK commercial property sales have reached their highest level since the economic downturn.
Arguably, there was no sector that was damaged more by the UK’s economic downturn than the country’s property market. Commercial and residential property sales alike declined to historic lows during these tumultuous times. Property Wire recently reported that commercial property sales equalled 139,000 in 2007/2009. This dropped to a paltry 92,900 in 2008/2009.
The market has slowly, but surely, recovered since it bottomed out in 2008/2009. Figures from Her Majesty’s Revenue and Customs (HMRC) illustrate that commercial property sales jumped to 115,400 last year, an increase of 6% from the year before.
Commercial property sales were particularly strong in England. Analysis conducted by EMW, a commercial law firm, proved that there were 97,500 commercial property sales in England alone in the previous year; 85% of the total for the UK.
Why commercial property rebounded
EMW Principal Nick Marshall explained why commercial property sales rebounded so strongly over the past year. Marshall said “commercial property assets are proving increasingly attractive to investors looking for higher yields in an environment with record low interest rates and this is driving activity towards pre-credit crunch levels.”
He elaborated that “there has also been a surge of interest from overseas investors, with the UK offering investor friendly lease terms. The relative shortage of vacant prime office space in central London is also making the market more attractive to investors.”
The EMW Principal concluded by saying, “bank lending has also picked up which has led to more activity in the market and lenders are now happier to fund purchases at higher loan to value ratios (LTVs). Without higher LTVs, many property investors were finding it hard to get the economics of their investments to work.”
Meaning for investors
This indicates that investors could benefit if they choose to invest in UK commercial property over the course of the next year, however property consultant Simon Morris would urge caution. Potential investors should conduct extensive research and seek professional advice if they hope to generate significant returns from investing in the UK’s commercial property sector.
Simon would also urge anybody who’s thinking of investing in commercial property to download his guide to property investment in 2015. This detailed guide explains the risks and rewards of pursuing this plan as an investment strategy, to provide you with the information you need to put yourself in the best position to generate significant returns on your investment.