A new forecast from Knight Frank has suggested that the UK’s specialist property sector is set to boom within the next five years. Property expert Simon Morris explores whether now is the time to enter the specialist property market.
Specialist property can be a profitable investment
As a London-based property consultant, Simon Morris leans on his expertise to advise UK property investment funds how to maximise profitability on their property investment portfolios.
One area of the UK property market that can prove profitable is the specialist property sector. A plank of the commercial property market, the core of the specialist property sector includes automotive, hotel, healthcare and student properties. New figures suggest that this sector is set to rise within the next few years.
20% of the commercial property market by 2020
World Property Journal has recently reported that a new forecast from Knight Frank has revealed that specialist property will compose 20% of the commercial property market by the year 2020.
The forecast went on to explain that several key factors are set to spur progress within the specialist property market. These include structural changes like the aging population of the UK, along with a rise in the number of students attending university and a growth car ownership, coupled with a pickup in occupier demand for high quality property.
The forecast also suggested that investors are turning to the specialist property market to seek better returns. This development comes as yields are being “tightened” in traditional sectors like offices and retail. Investing in specialist property also provides diversification for any property-based investment portfolio. In 2015 the deal volumes for specialist property are set to rise steeply, along with further yield compression and rental expansion.
Appetite for special property already on the rise
The Head of Global Capital Markets research at Knight Frank, Darren Yates, spoke out to summarise why appetite for specialist property market is already on the rise.
Yates said: “With improving occupier demand, easier access to finance and a greater willingness to move up the risk curve, investors’ appetite for specialist property continues to increase. Indeed, for many investors, specialist property now forms an integral part of a core portfolio.”
Research before you invest
As such it looks as though specialist property could prove a valuable investment for UK property investment funds going forward. Yet as property specialist Simon Morris recently advised when offering expert advice on investing in property in 2015, potential investors should do their research and seek advice from an expert before they thread their capital into any sector of the UK property market.