If there’s one thing businesses hate, it’s uncertainty – particularly during General Election years. Traditionally, such times are a no-no for investment. It’s a time to sit, wait, see which party wins, and adapt accordingly. But, it seems, investors have no such qualms about investing this year.
In fact, according to the latest Lambert Smith Hampton’s UK Investment Transactions report, investment in commercial properties is soaring in the North West. In fact, even soaring is an understatement. What we’re seeing is incredible evidence that, even at the start of the election year, commercial properties across the UK remain a staggering success, with higher returns and far more investment.
The North West saw investment reach a colossal £977.5m in the first quarter of 2015 alone. That total is over 350% more than the same period of last year. Part of that came from overseas, which accounted for £156.34m and is double the investment figure for last year.
The single biggest area of investment in the North West during this time period has been in offices, which accounts for 47% of the final figure. There’s been an increase of 168% compared to the year before – 2015 has already seen £455.6m invested in the sector, in places such as Manchester’s MediaCity.
Of particular note, too, was investment in the North West’s hotel sector. How many hotels do you suppose people invested in Q1 of 2014? If you said ‘none’, you’d be right. The North West saw nothing last year; this year, on the other hand, has seen £98.8m.
‘Commercial Property Remains Robust’
Lambert Smith Hampton’s regional head of capital markets, Abid Jaffry said: ‘The outcome of the General Election may be the most uncertain in a generation, but the case for investment in UK commercial property remains robust.’
He continued: ‘As a rule, investors don’t like uncertainty. However, factors such as the on-going low interest rate environment, the welcome return of rental growth across the length and breadth of the UK, and the country’s reputation as an economic safe haven are having a positive influence in the market.’
Not Only the North
Indeed, it’s not only the North West that’s experiencing a commercial property boom thanks to an improved economy. Much of the UK is also feeling fairly bullish, in terms of investment. Giant advisors of the industry, Savills, has noted, in their Market in Minutes report, that the average total return for investors in commercial properties stands at an impressive 18.63%. For a comparison, gold gives investors a return of -8.9%.
Mat Oakley, Savills’ commercial research analyst, noted that: ‘In the current macro-economic climate, commercial property remains a popular choice for savvy investors, surpassing other asset classes in providing substantial returns.’ However, Oakley was quick to point out that, ‘as we approach May’s general election, the primary risk for property is the removal of political consensus around fiscal consolidation and bringing down the deficit. A lack of clarity would undoubtedly be a drag on investor confidence.’
That confidence doesn’t yet seem dented, of course, if the latest figures are anything to go by. As ever, though, we’ll keep our eyes on the markets and bring you the latest news. Of course, choosing to invest in commercial property always requires sage advice and sound counsel. And that’s precisely what we can offer you. Here at Prideview Properties, we’ve been part of the industry since 1985 – and that experience has given us the edge over other commercial property agents in London. Should you require unparalleled advice with regards to your own commercial property portfolio, we’re on hand to help. Simply contact us on 0208 863 8680 and our experienced team will be delighted to help.