How to bag a good commercial property investment
According to the RICS Q4 2015 UK Commercial Property Market Survey occupier and investment demand for commercial properties is continuing to rise, albeit at a slower pace than previously. However, the report notes that demand is outstripping supply throughout the whole of the UK. With this in mind, we ask how you can bag a good commercial property investment.
There are three different types of commercial property – retail, office and industrial – and research from a property consultancy suggests the total investment in the three different categories during 2016 will amount to more than £70 billion. Much of this investment has come from overseas and is focused on the central London market. However, if you’re one of the 12% of private investors who owns one or more commercial properties and are keen to broaden your property portfolio, or are looking for a first time investment, there are some simple steps you can take.
Ask yourself why
By establishing the reasons that you wish to invest in commercial property, you will be able to more easily identify the type of property you’re looking to invest in. Perhaps you’re looking for a low-risk investment or the security of a tenant on a long lease or perhaps you want a long-term investment in an up-and-coming area. By knowing what you want to accomplish in the future, you will stand yourself in good stead of achieving your investment goals.
Know your priorities
Knowing the difference between what you want and what you need is vital. It’s a good idea to make a list of the most important factors in your property search so that you can compare them to the actuality of the situation. It may be that you will need to compromise on certain aspects, such as price or location, but if you’re able to do this you stand a far greater chance of finding a property that suits your needs, rather than your wants. By focusing on your preferred options you can also identify several alternative properties should your first choice fall through.
Set a budget
Your personal finances will usually dictate how much you have at your disposal in your commercial property search. Whether you’re relying on the equity from a previous sale, your savings or a buy-to-let loan, make sure you factor in all the expenses you will incur and set them against projected income to see if the books balance in your favour. A sizeable deposit will strengthen your negotiating position too.
Do your research
In order to source the very best property for your requirements, extensive research is needed. The internet is a valuable research tool with many sites listing commercial properties – you can sign up for email alerts when new properties become available. Industry journals are an excellent source of background information about the property market as a whole. You can use them to analyse geographical trends and pricing forecasts for an indication of where may be a good location to purchase. If possible, get in touch with your local Chambers of Commerce to see if they can advise you, and make the most of any personal contacts you have. If you have spotted a likely location for your next purchase, try to contact the current owners to see if they would be amenable to a sale, or ask if they know of any similar properties which will be likely to come onto the market in the future.
Searching for a commercial property investment is a fluid and dynamic function. It’s a rare occurrence that the right opportunity drops into your lap, so hard work, determination and not a small amount of luck is needed for the most satisfactory outcome. At Eddisons we have experts in the commercial property field whose wide range of professional knowledge can assist you in your search for the right property for you. If you need advice, please get in touch.
It’s a rare occurrence that the right opportunity drops into your lap, so hard work, determination and not a small amount of luck is needed for the most satisfactory outcome
Written by: John Padgett on Monday 14/03/2016