INVESTMENT
Competitive Cambridge While a high-demand city is attractive to investors, it means intense competition for investable properties, reducing available real estate stock. Savills cites Cambridge as a city that has low office availability and limited choice for occupiers. This means valuers are applying higher rental value growth and above average increases in capital values; you pay higher prices for the same property stock, and profitability is squeezed. Philip Woolner says the competition to own property in the city is “quite intense, because the story of Cambridge is so good”. “Cambridge stands out for the growth potential everyone sees here as well as its sector-specific nature,” he says. “This is one of the places in the world where tech businesses want to come and set up their research and development (R&D) facilities.” This view is substantiated by the recent move
Cambridge warns, commercial property investment is “not for the uninitiated”. “If you don’t know what you are doing then you need to take good advice from a surveyor,” he says. “Freehold transactions are more straightforward, but some investments are long leaseholds. You need to look carefully at what the leaseholder interests are to ensure what you are buying is a good investment.” To reinforce the point, Woolner states that residential leasehold documents might be roughly three to four pages whereas a commercial lease would be a minimum of 35 pages – although often around 65 – and each one is usually different to the next. Other major considerations are the financial strength of your tenant and whether you believe they will remain in business for a long time. Just like with
While a high-demand city is attractive to investors, this means intense competition for investable properties, reducing available real estate stock"
from Chinese communications giant Huawei, which splashed out £37.5m on the 550-acre former Spicers site at Sawston. Large amounts of central Cambridge are owned by the university and its respective colleges: the combined property holdings of Oxbridge colleges were worth £3.5bn, while the universities collectively hold property investments worth £863m in 2018. Beyond this, strong demand means rents are being pushed ever higher, possibly reducing the pool of tenants
a residential let, if you don’t have a tenant, you still have to pay the mortgage (see box).
23
ISSUE 04
cambridgecatalyst.co.uk
Powered by FlippingBook