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Comment: Bespoke purchases at a new high as investors return to real estate

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With signs that liquidity is returning to the commercial property sector in the UK, investors are returning to the market in order to take advantage of emerging opportunities says Daniel Freedman (pictured), Joint Managing Director at London & Capital, the boutique wealth manager.

 
At 3%, Investment Property Databank (IPD) figures for December – released only last week – show the largest recorded monthly capital growth in commercial property in the UK for some 23 years.
 
With signs that liquidity is returning to the sector, many property managers share a renewed optimism as investors return to the market in order to take advantage of newly emerging opportunities.  It is a trend paralleled by a renewed appetite for property assets amongst London & Capital’s private clients as investors seek new sources of income.
 
Demand is hitting a new high and with attractive yields available, when there is currently little or no return on cash, we are seeing a flight towards property once again. Bank disposals aside, we are identifying many investment opportunities, quality assets with long leases, and our private client teams have seen renewed interest from those looking to explore the sector as an additional hedge against inflation. A significant number of clients are looking to make a bespoke property purchase for further diversification benefits within multi-asset portfolios.
 
For example, London & Capital’s team of property specialists this week completed the purchase of a convenience store let to Tesco in Durrington, near Salisbury, Wiltshire on behalf of one of its long-standing private clients. The investment provides an initial yield of 5.7% and the 15 year lease provides for 5 annual ‘upward-only’ rent reviews linked to RPI, delivering index linked rental growth over the course of the lease. At GBP 850,000 it is typical of the kind of asset investors are adding to their portfolio at this time.
 
Whether you are buying with a long-term view, for income or as a hedge on inflation, it is a good time to buy and a real opportunity to lock in to some capital growth opportunities.  

 

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