There is a unique investment opportunity in the UK commercial property market over the next six to nine months.
In the UK, we have a well-structured, institutionally aligned property market, with a lot of liquidity because there are always buyers and sellers in the market.
What I always tell my clients is that as a result of the nature of the UK property market, if you’re looking to sell a unit, it will likely sell pretty quickly provided it’s priced correctly.
It’s important to remember, however, that a lot of those people in the market will usually be buying with debt.
This will either be because they haven’t got enough money to buy in cash or because if the rent is higher than the loan interest rate, then you can make double money on the borrowed part.
But, at the moment we have a situation where interest rates are at a level that the attraction for borrowing money in many cases is not there.
As such, the number of people who would usually be in the market buying property with debt has significantly decreased.
This presents an opportunity for investors who are able to buy with cash because commercial property prices have dropped while rents have stayed the same.
Previously where you might have bought a property and received between 5.5-6% rental yield, now you can buy the same property and get anywhere between 7.5-9% rental yield.
So, investors can buy the same property, but get a higher return.
In due course, as interest rates fall, liquidity will return to the market and yields will compress once again.
The strategy is therefore to invest in good-quality commercial buildings in solid locations, with historically high rental yields of 7.5-9%, with the dual benefit of generating steady rental income over the holding period and the potential for increased capital returns upon sale.
With that being said, this window of opportunity will not last forever, as the Bank of England will reduce the base rate at some point in the relatively near future and then all the banks will slowly follow after that.
This is an excellent opportunity if you’re looking to diversify your portfolio into UK property and at Curzon Land, we’re here to help you carry out this investment plan.
We can source a commercial unit for you, facilitate the purchase of these properties, coordinate with brokers, lawyers, surveyors and do all the heavy lifting to ensure that the process runs smoothly.
So, if you’re interested in the investment opportunity, get in touch by emailing us at cgreen@curzonland.com or call us at +44 (0)7948 979 490.
