INVESTMENT
who will be able to afford the monthly payments: prime sites in Cambridge are now demanding around £45 per square foot compared to between £20 to £25 a decade ago, according to city agents. More broadly, the city’s local plan, adopted in October 2018, predicts 44,000 jobs and 33,000 homes will be created by 2031. For smaller investors, therefore, investable opportunities may be more attractive outside the city. Philip Woolner suggests “looking where the chimney pots are going”, given that larger residential developments are likely to be accompanied by a surge in surrounding commercial property. Action required Just like any asset, care and attention is needed to achieve results in commercial property. A tenant is only going to want to pay the market rate if the building is of a good standard, which might require further investment from the owner post-purchase.
Care and attention is needed to achieve results in commercial property. A tenant is only going to want to pay the market rate if the building is of a good standard, whichmight require further investment from the owner post-purchase"
which type of tenant you want. Such a decision obviously has a huge impact on the building you invest in, given the needs of a retail or an industrial tenant, for instance, are very different. Analysing industry data is a useful way of deciding which sector to target. The Royal Institute of Chartered Surveyors (RICS) produces its Tenant Demand Indicator on a quarterly basis. This remained in negative territory for the fifth consecutive quarter in Q2 this year, but the retail sector was largely responsible for this, while tenant enquiries for industrial space “continued to rise smartly”. If possible, it would be sensible to diversify your
Attracting – and importantly keeping – a tenant is vital to the success of a commercial property investment, too. Not only does their rent pay the mortgage but a high-quality tenant could bolster the property’s capital value during an economic downturn. Given that Savills expects price appreciation to account for less than one third of total returns across UK property for 2019 to 2023, keeping tenants happy will be extremely important for any near-term property investment. Picking a side Before deciding how to keep your tenants happy, you need to identify
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