Long term trends indicate that not only is real estate rising in value, but commercial property is as well, showing Simon Morris its value as an investment option.
Simon Morris, Independent Property Specialist
As a London-based, independent property specialist, Simon Morris acts in an advisory capacity to UK property investment funds. This means that an essential element of Simon’s role is to monitor long term property trends.
Throughout this line of work, Simon Morris has noticed how effective investment in commercial property markets by UK property investment funds can reap significant rewards for a well-balanced property portfolio boasting carefully calibrated commercial property elements.
Commercial Property Values 10% Higher than a year Ago
This point was further emphasised by an article that featured in the Independent this week. The article, The increasing value of commercial properties,’ outlined why commercial, as well as real estate property values are on the rise.
Using data from the Investment Property Databank (IPD), the article goes on to show that in June, commercial property values across the board rose 1.6%. That means they now stand 10% above the value of commercial property in 2013; with total returns in the 12 months to June 2014 measured at 17.6%.
What Has Driven Commercial Property Value Rises?
The article went on to explore the reasons for such value spikes. Essentially, despite the fact that rental values for commercial property rose by nearly 2% in the period in question, the main catalyst of growth was falling yields.
Falling yields have made investors more confident about the future performance of commercial property throughout the UK, accepting a lower upfront return. This ensures that investors see commercial property as a more stable revenue driver for their property portfolio.
The UK Commercial Property Market Still Has Potential
The article goes on to conclude that, despite the fact that foreign investment in UK commercial property has decreased (yet is still responsible for roughly a third of transactions) the market still has considerable room to grow. That is important to remember.
Ultimately, Simon Morris believes that investment opportunity calculations need to made through both raw numbers and potential. The fact that commercial property values are not only rising, but they are not done doing so, shows in Simon Morris’ opinion why commercial property continues to provide value as a stable investment opportunity for UK property investment funds going forward.