There's a Window for the Best Time to Invest in Commercial Property, and it's Right Now!
It has been a difficult few years for the commercial property market. Demand for commercial property has fallen as more and more businesses have struggled meaning that investors have had to cope with falling values and increased void periods. Now, though, there are signs that the commercial property market may be starting to stabilise.
As the British economy begins to recover, data from a leading property group has shown that the commercial property market in the UK is showing signs of an upturn. And, with the Government agreeing higher commercial mortgage lending targets, loans and finance to buy property should be more readily available in 2011.
The commercial property sector produced capital growth of 0.3 per cent and a total return of 0.8 per cent in February. This is according to new figures from CB Richard Ellis' monthly UK property index. This is a marginal increase on January's figures (a 0.7 per cent total return) as yields continued to fall slightly thanks to continued demand from investors.
Central London offices led the recovery with a capital growth of 1.1 per cent and total returns of 1.5 per cent in February. Another sector that helped nudge the figures upwards was retail warehouses, which showed a capital growth of 0.5 per cent in February 2011.
With both the retail and office sectors showing improved results, and industrial the only sector which saw slightly weaker returns, February's property market performance in the UK was generally more encouraging than what was seen last month. That is the view of Nick Parker, Senior Analyst at CB Richard Ellis who published the data. Mr Parker continued: "Perhaps the most positive story is the resilience being shown in the retail sector, with all three sub sectors producing stronger than anticipated returns, despite concerns surrounding the strength of the consumer economy."
CBRE's figures back up other recent date from the Royal Institute of Chartered Surveyors (RICS). 18 per cent of surveyors questioned recently said that they expected activity in the commercial property sector to increase in the next few weeks whilst many others believed that commercial property was set for its 'best quarter since 2007'.
Increased access to commercial mortgages and business finance is also likely to help the commercial property market. A target of GBP76 billion to small businesses has been set in 2011 up 15 per cent on 2010. In addition, GBP11 billion of additional commercial mortgage lending has been agreed for this year as part of the Government's 'Project Merlin' scheme.
In addition to data showing capital growth in commercial property, commercial lending is also up in early 2011. GBP1.1 billion more loans to private companies were agreed in January 2011 than in December 2010, an annualised rate of increase of 2.6 per cent.
Low interest rates also mean that it is a good time to borrow on a commercial mortgage to buy commercial property. With loans becoming more widely available at competitive rates, it can make financial sense for many businesses and investors to put their capital into offices, retail units, factories or warehouses.
Now could therefore be the perfect time to invest in commercial property. With property prices beginning to show signs of recovery and banks agreeing higher commercial mortgage targets, 2011 could be the year to buy.
About the Author:
Howard O'Gollegos writes for Just Commercial Mortgages the UK's No1 site for the latest commercial mortgage rates and commercial property finance news.
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