Simon Morris keeps an eye on all the latest UK property news in his capacity as a London-based independent property specialist who acts in an advisory capacity to UK property investment funds. Today, he’s looking at yet more positive news from the Investment Management Association (IMA).
The IMA represents the UK investment management industry and often reports interesting and insightful facts that are of interest to those looking for a property based investment. The IMA recently released figures that said in the last month investors put more cash into UK commercial property funds than in any month since 2009.
The Rising Tide
Simon Morris believes that investors are looking to catch the rising tide in the UK commercial property market. While commercial property funds and bonds are rising in popularity, UK residential property also continues to be buoyant.
The issue with residential property is that most investors are already exposed to gains in the residential market through their own property or properties. This means that they’re more likely to look at commercial property for an investment vehicle, it’s the old adage of not putting all your eggs in one basket.
While it’s true that commercial property outside London is still 30% below its peak value, the intelligent investor can see that yields are higher than average and represent an excellent return.
Above trend yields outside of London, especially around The Midlands area are proving increasingly popular. I recently blogged about Birmingham commercial property bouncing back, it’s not just high end retail shopping destinations that are making a comeback, it’s also distribution centres and warehousing that are proving to be evergreen investments.
Warehouse and Distribution centres
The much publicised downturn and the rise of online shopping nearly brought death to the high-street over the last five years. However, the rise of online shopping has led to a demand for warehouse space and fully equipped distribution centres. Again, the Midlands has proved a popular base for online companies due to the unique geographical location in the UK.
Easy access to the North and South has meant that the Midlands has seen a boom in this type of commercial property. While shops and supermarkets sometimes move around, these types of operation tend to stay in one location, for a long period of time.
Warehouses, smaller industrial units and distribution centres could prove to be a wise investment to help balance your portfolio. As Simon Morris always advises, you should always measure the element of risk in your portfolio, but for now optimism surrounding commercial property investments looks like it’s here to stay.