New figures from real estate specialist CBRE have shown Simon Morris that the UK commercial property sector recorded its biggest rental value growth in 2014 since the third quarter of 2007.
The profitability of the UK commercial property market
As a London-based property expert, Simon Morris advises UK property investment funds how to invest effectively in the UK property market in order to attain high profit margins.
Simon’s experience has shown him how profitable the commercial element of the UK property market has proved throughout the course of the economic recovery which has lifted the fortunes of every facet of the UK property market. New figures show that the sector has returned to the heights it experienced at its peak in 2007.
Total prime rental growth rises 3.8%
Property Wire recently wrote that a new report from CBRE shows that rental values in the UK commercial property market racked up their highest growth in 2014 since the third quarter of 2007. CBRE monitored 1,022 commercial property locations for the report and 16% illustrated a rise in rental values.
Meanwhile figures show that there was a 3.8% rise in total prime rental value growth throughout 2014. This is an increase from 2.8% in 2013. Also 2014 saw a fall of 41 basis points in the average prime yield recorded by the sector. In contrast there was a decline of 32 basis point in 2013. This combination of strengthening rental value growth and steady fall in yields spurred an 11.8% capital value growth in 2014.
“Growth in investment activity.”
CBRE senior director Michael Haddock commented on what these figures indicate about the UK commercial property market. Haddock noted that “during 2014 we have seen prime rental growth strengthening across many UK markets. Prime yields also recorded a substantial improvement, reflecting the growth in investment activity over the last year.”
Haddock went on to comment that “at a national level, total transaction volume reached £61.7 billion in 2014 compared to £54.5 billion in 2013 and just beating the total reached in 2006.”
Funds should consider all aspects of an investment
What do these figures indicate about the profitability of the UK commercial property sector? They suggest that it could prove lucrative for UK property investment funds. However, as Simon advised when looking ahead to the property market in 2015, funds should consider all aspects of their investment before they devote capital to it.