INVESTMENT PANEL MEETING INDICATES CHALLENGING MARKET
The early Summer PAI Investment Panel Meeting, kindly hosted by the group’s Newcastle Member, Naylors, highlighted the challenges being faced across the commercial property investment sector.
The national data and the experiences of PAI Members all point towards a slow down in investor activity as general uncertainty in the wider economy starts to bite.
The facts speak for themselves :
• £13.8 billion spent on UK commercial property in Quarter 1 2019 – down 9% quarter on quarter
• The Quarter 1 volume was propped up by three £1 billion + deals agreed in the second half of 2018
• Removing these deals reduces the volume to £9.5 billion, making it the second weakest quarter since 2012
• Average all property yields rose to highest level for a year pushed up by retail and regional offices
• Investors continued to move away from the three traditional sectors towards alternatives – hotel and build to rent investment particularly strong in Quarter 1 2019. In contrast it was the weakest retail volume performance in more than 10 years at £1.2 billion, down 32% year on year and just 9% of the total spend in Quarter 1. Shopping centre volumes were extremely weak below £50m – this is contrasted with the 10 year quarterly erage which is £783m.
In these times of change, the benefits of the PAI Investment Panel become clear. Bringing together a large number of senior commercial property players from across the UK to regularly meet, share market knowledge and most importantly introduce deals between the group, provides the opportunity to maintain transaction levels set against a very difficult wider background.
The Newcastle meeting chaired by Banks Long & Co’s Managing Director, Tim Bradford, demonstrated that there remains a healthy appetite from a wide range of property investors to buy the right type of product.
It is evident that there has been a clear move away from retail, especially High Street shop investments and a move into alternatives. The group reported clients actively looking for long secure income, hotel investments and medical investments.
However, Members, all of whom have witnessed a number of rises and falls in the market over the decades, remained upbeat and called for more product to come to the market – the issue does not seem to be investor appetite/availability of cash but the shortage of good quality stock priced correctly.
In times like these, the value of top quality advice from experienced commercial property investment advisors cannot be underestimated. The regular Investment Panel meetings and the weekly liaison between Members provides for an additional depth of knowledge and understanding in a market sector which relies on sound and solid decisions to be taken on large ticket transactions.