In light of new suggestions from experts defying the recent dip in values, this week Simon Morris asks whether the UK’s commercial property market is set to provide record growth for UK property investment funds.
Catch the Sector at the Right Point
Simon Morris is a property specialist, with a focus on commercial and residential property, who acts as a consultant to advise UK property investment funds on how best to extend their profit margins on their property portfolios.
Profiting from any area of the property sector depends on catching that sector at the point where it’s about to expand rather than contract. This is something that could be the case for commercial property in the UK, as we see out 2014.
The Growth of the UK’s Commercial Property Market
Commercial property has been riding high throughout 2014 on the back of the economic recovery that has boosted the national property sector as a whole. According to the IDF UK Monthly Property index, commercial property values have risen 12.8% over 16 consecutive months of growth.
Yet growth volumes for August were some cause for concern. The commercial property market did still record a growth in values for August, However, this growth rate slipped to 0.9%. It was 1.1% in July. But the release of a new report suggests this is no cause for concern, as the country’s commercial property market is on track to deliver its most robust returns in 25 years.
Commercial Property to Provide Record Return Volumes
According to City AM, a new report by M&G Real Estate has suggested that 2014 will be an “exceptional year” for commercial property returns, which could rise to as high as 20%. Then they will return to more normal rates of 6%-8% in the medium term.
The report goes on to suggest that this record growth will be spurred by rising investor confidence, improving rents in the property market and increased liquidity. Explaining the prediction further, Richard Gwilliam from M&G suggested that “the UK economy and property market are experiencing rapid growth, leaving behind a period of difficulty that discouraged risk appetite across the board.”
The Wisdom of investing in Commercial Property
There’s no denying that the UK’s commercial property market has had a fantastic year, so it is very possible it could provide record returns by the end of 2014. In Simon Morris’ opinion, this report just further highlights the wisdom of incorporating commercial property into portfolios for UK property investment funds right now.