Commercial Property Investment Still Finds ‘Warm Support’

Reading how UBS Bank’s Investment office for wealth management describing “warm support” for commercial property investment is probably stating the obvious, but some of the commentary around the piece from City.A.M. makes interesting reading.

The view from the Investment teams at Harris Lamb has been that commercial property investment has been generally good value for Investors for 2 or 3 years now.  With interest rates at 0.5% for so long now the attraction of yields on property over 5% allied to potential capital value appreciation means there has been ‘good value’ to be had.

The piece in City.A.M. points out returns from property having ‘far outstripped’ bond yields and the UK commercial property market has performed strongly in 2014 – comments we would echo.

The recovery in the values on property are highlighted by the IPD UK monthly Property Index which says capital values have recovered by 28% from their trough.  The bad news for long term investors is values are still 29% below the heady peaks of 2007.

What does 2015 have in store though?  Posing the question – ‘So is property hot?’ the article says:-

  • 2015 outlook for Commercial Real Estate remains positive
  • Envisage a 10% total return from the direct commercial property market in 2015
  • 5% capital value returns in 2015
  • Is the commercial property sector in aggregate becoming overheated? – No is the view.

 

At Harris Lamb we would be broadly in agreement with these views from UBS but with one very major caveat over the ‘State of the Nation’ and politically what may be ahead of us after May’s general election.  How the result of May’s general election affects the view and performance of UK commercial property returns is a case for ‘best guesses’ – who knows?

For advice on Commercial Property Investment, contact peter or one of the Investment team at Harris Lamb.