PROPERTY INVESTMENT: A CHALLENGING MARKET IN CHALLENGING TIMES

With the General Election fading into the background – but Brexit still hitting the headlines, Autumn could be the perfect time for potential investors to take a fresh look at opportunities on the commercial front, as Banks Long & Co managing director Tim Bradford explains….

The fundamentals behind investing in commercial property – as an income generator – are similar to the principles of investing money in other asset classes, such as stocks and shares. 

Banks Long & Co manages a large number of property investment portfolios for a wide range of clients. They depend on the advice and experience which we, as a firm, can offer. Over the years, the number of clients who are able to access the market has increased. However, with the rise in demand comes an increase in the risk of buying a property quickly as an investment vehicle, without carrying out the appropriate level of due diligence.

Eight months into 2017, we are seeing a competitive market with a clear divide between the types of property which are attracting interest and those which are not.  In simple term, the market is split into “the best” and “the rest”.

“the best”

Good quality office and industrial/warehousing located on major communication links, especially in the south and south east

Retail/restaurants in affluent centre/towns with long-term secure income

Food stores

Medical investments almost anywhere with 10years-plus unexpired lease terms

 

“the rest”   

Secondary first generation offices

Older industrial stock

City centre secondary retail

First generation retail warehouse parks

Secondary shopping centres

 

Whilst a lull in investment activity is nothing unusual in the wake of a General Election, things tend to settle down.  General volumes of investment sales remain strong, although these tend to be skewed by very large transactions in London.

At Banks Long & Co we have bought and sold in excess of £50 million of investment property for clients over recent months.

We are expecting the market to bounce back in the Autumn but, with a shortage of good quality stock, it is very important that anyone or any business looking to invest in what is a specialist illiquid asset class seeks the advice of an expert.

The market has not been so challenging since the years following the 1980s recession. With events which we cannot control, such as Brexit, it is now vitally important that parties looking to invest against a challenging economic backdrop look at some simple fundamentals – including location, covenant and unexpired lease term.

Take advice.  It is worth it.  We have seen – and had to deal with – the aftermath of people buying property without taking proper, experienced, advice.