INVESTMENT
Anna Lawlor, co-founder of Luminescence Communications, on the pros and cons of investing in commercial property
Direct or indirect? A crucial decision is whether to make your property investment directly or indirectly. A direct investment means either buying a property – its freehold or leasehold – and generating a return from a tenant or setting up a business there, or investing in a fund that does the same thing. An example of this would be M&G Real Estate, which recently purchased a warehouse development on Buckingway Business Park in Cambridge for £22m. An indirect investment includes investing in the shares of property companies, developers or housebuilders, or investing in a fund or real estate investment trust (known as a Reit) that targets the same opportunities, but can be traded similarly to shares (see issue 2 of Cambridge Catalyst for more on this). investments to be located might help make the direct or indirect decision. Investors don’t have any control about where a fund manager buys property for their fund but a direct investor can choose to home in on one location, such as Cambridge. That being said, as Philip Woolner, a managing partner at Cheffins in Location, location, location Where you want your property
ith Cambridge’s seemingly ever-buoyant property market attracting international
interest and the expansion of myriad property developments springing up, is commercial property the missing asset class in your investment portfolio? Commercial properties are premises that house the likes of shops, warehouses, offices, cafes, hotels, restaurants and pubs, and are usually owned by an individual, company or organisation that then rents them out to a tenant. The collection of this rent provides an income stream for the owner – as does any price rise if the building is ever sold – making it an attractive asset class to include in a portfolio. With UK commercial property investment volumes hitting £62.1bn in 2018, according to estate agent Savills, plenty of people seem to be doing it, too. While last year’s figure was 5.7% below that of 2017, it was comfortably above the three-year rolling average of £59.8bn, suggesting commercial property investors have largely regained their confidence after the shock they exhibited on the back of the EU referendum result. Snapping up a commercial property might sound ideal, but there is a lot to consider.
Commercial property investors have largely regained their confidence after the shock they exhibited on the back of the EU referendum result"
ISSUE 04 22
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