25th October 2013
The unpredictably fluctuating state of the UK property market has continuously been making the news for the past few years, with visions of stability deteriorating numerous times. It now seems that commercial property in particular is really is making a comeback, and is no longer a risky investment, with many urban centres once again seeing a boom in commercial activity and decreases in vacancy rates. Many people believe that now is the prime time to make an investment in commercial property.
A recent report in the Investors Chronicle claimed that commercial property may be significantly undervalued in the current property market. In some areas of the country, things are picking up and commercial properties have seen rises in value of up to 20% during this year alone. This is predicted to pick up further in the coming months, with commercial property still not yet as favourable as other sectors.
The overall fact is that the property market is now beginning to experience a boom period, with figures suggesting that the average property price has now surpassed the pre-recession peak in 2007 in some areas.
Sceptics are claiming that this positive outlook cannot be said for commercial property, and point to figures suggesting that commercial property outside of London is still valued 40% below what it was in 2007.
However, due to other asset classes as well as the FTSE being restored to pre-recession highs, potential yields on commercial property investment are currently surprisingly attractive, with the Investment Property Databank giving the sector a gross yield of over 6%, and areas outside the South East seeing around 8%. When combined with current low interest rates within the commercial sector, it seems that now could be the prime time for investment as, if growth continues, potential rental rates are likely to increase as the economy continues to build strength.
This attractive average gross yield rate has not gone unnoticed, and even outside London and the surrounding area private investors and private banks are beginning to take note; especially since it was announced that interest rates are set to remain at their attractively low rate for the foreseeable future.
This combination of attractive yields, low interest, increased availability of finance, rising GDP and falling vacancy rates is having positive effects on the commercial property industry, and the number of individuals and organisations making the move into the industry is currently growing, with many people predicting significant growth in the coming months.
Here at Prideview Properties we have a great deal of experience with commercial property and, having experienced all the market highs and lows in the past 25 years, agree that now is an excellent time to purchase commercial property, with good prospects for future returns on investments and potential rent increases. If you need guidance on the best options for you, our expert advisors are here to help. Take a look at our current commercial properties for sale, which are located across the country, often in areas which currently offer excellent value, yet also where significant future growth is predicted.