Looking for a mid-market commercial property investment? Here is what you should know.
With a solid finish to 2017 and the slow (but steady) strengthening of the Pound, 2018 is looking to be a great year for those looking to invest in commercial property for sale in London and the UK. In particular we are seeing a great deal of interest and growth within the mid-market (£2m-£5m) investment bracket. This is a space that is out of reach of the traditional private investor but under the radar of institutional buyers.
From the outside what you get for your money in this bracket may not differ greatly to a deal below £2m. The lease profile may be exactly the same, the strength of the tenant could be quite similar and so could the yield. The difference is that once you’re looking at this tier, you are exposed to the strongest areas and the strongest locations (like London and regional town centres) which often make for a better asset long term.
The changes in tax laws for residential property are still having a significant effect on the property market, meaning both domestic and foreign investors are looking seriously at commercial property investment. For foreign investors, the UK market is greatly alluring thanks to its relative stability and excellent legal framework. These investors generally have larger budgets to work with as smallers lots are generally not worth the time and effort for them. In the past a residential property may have been appealing to these investors, but with the new tax laws they are seeing the greater advantages to owning commercial, therefore shifting their focus.
When it comes to domestic investors, those interested in this category are typically not new to commercial property investment and typically want more than just a vanilla investment. They may already own a few pieces of property and would likely have vast knowledge about buying and selling commercial in this market. With the increased difficulty of sourcing development opportunities, those who may have been looking at developments in the past are now eyeing up commercial investment opportunities with medium term development or value-add potential.
Whether you’re an overseas or a domestic investor, one thing remains the same: with more and more capital chasing fewer deals, it’s becoming increasingly difficult (and time consuming) to source solid investment opportunities through one’s own network. This is where the friendly team at The Prideview Group can help. With over 30 years experience within the commercial property industry we can use our broad network of connections and insider knowledge to help you get the the best deal possible. We are highly experienced in dealing with both domestic and local investors, with a proven record for securing high quality deals for our investors. Below are just a couple of examples of deals we have done for investors in this mid-market segment:
This service station in a popular Cotswold town was secured off-market by us using our private network of agents. Comprising a Co-op Food convenience store, Texaco petrol station, Travelodge Hotel and Burger King and Little Chef restaurants, this freehold blue-chip investment has been let for over 10 years to both Co-op Food and Travelodge Hotels. The lot size was ca. £5m, reflecting an attractive yield of ca. 6% for what is a very secure, mixed investment. Considering the competition for this type of investment and lot size, this was an extremely good deal for our overseas investor.
This freehold retail investment in a popular town centre in north-west England was acquired for ca. £3M at a very attractive yield given that it is let to a blue-chip tenant for a further 12 years. The buyer runs a successful international business headquartered in the UK and wanted a hassle-free investment with above average yields for his pension, and was also open to investing in larger lots outside of London which are both out of reach of traditional private investors and under the radar of the institutions.
This property was secured for around £4m, for a local buyer with a large development portfolio. He was struggling to find a good project within his own network, and by working with us was able to acquire the property he wanted. Located in the affluent outer London suburb of Harrow, the area already has an established commercial centre. The freehold ground and first floor office already had planning permission granted and our client is currently developing it out to maximise its value.
If you’re looking for commercial property for sale in London, The Prideview Group would love to help. With a number of off-market investments available now, you can visit our current opportunities page to view some great deals, or register your requirements with us, and we’ll tailor the opportunities to your specific needs.