Is The UK Still The Top Global Location For Commercial Property Investors?

The Brickvest Barometer

During the final quarter of 2017, investors saw a decline in commercial property investment in Germany
from 34%- 23% while the UK saw tremendous growth from 27%-29% making it the top global location
for commercial property investors. The Brickvest barometer indicated that with the fall of Germany to
second place, UK took first place with the US taking third place and France second place with 19% and
18% ranking respectively.

The report also found that secondary cities such as Manchester as well as Birmingham showcased
improved performances in terms of popularity and performance. This fact proves that even though
commercial spaces come at a premium on capital cities, investors can still gain value when they invest in
regional parts of the UK. The interest in the investment in secondary cities has steadily grown from 37%
during the third quarter to 41% during the end of 2017.

Shawbrook Bank Annual Barometer

The Shawbrook bank annual barometer also channelled a positive outlook in terms of commercial
property investment, showcasing confidence of 78% in terms of the lending environment despite Brexit
from 72% in the year 2017. The hunt for income was rated highest at 38% as the priority primary
investment objective for investors in the last quarter. This fact, therefore, sees it rise to 32% with 6%
during the third quarter of 2017. Despite the many uncertainties that come with PRA changes as well as
Brexit, the positivity showcased by commercial mortgage brokers is quite encouraging.

Why invest In commercial property In UK

During the financial crisis that occurred globally, the UK commercial property suffered a depreciation
where prices dropped by about 44% from 2008-2009, but this has since changed, and investors have
now witnessed a sparking growth in the value of investing in commercial properties. There is an increase
in demand on the UK commercial properties for both local as well as international investors. Andrew
Milligan, who heads the Standard Life Global strategy strongly believes that commercial property in the
UK will yield higher returns compared to shares in the future.

 Longer lease structures

In comparison to many other countries, the UK employs a more extended lease structure, which
is highly beneficial as it gives investors more solid security in the long term. The average lease
term in the UK is eight years meaning investors can expect longer regular income.
 Higher rental return
Commercial property in the UK showcases a higher rental performance compared to residential
properties due to their nature and potential as well. Additionally, over some time, there will be
an increase in the overall value of the property.
 Sensitivity to market trends
 Direct ownership of property in the UK is a highly tangible asset and can quickly be reviewed,
renovated as well as redeveloped as the market shifts offering investors better control at
handling occupier needs as well as changing trends.
 Maintenance and repairs
Generally, in the UK, tenants handle maintenance and repair costs on their own, and this is
achievable through FRI lease or full repair lease. Investors are advised to choose tenants that are
financially strong and reliable and have an excellent reputation that will not default on repair and
maintenance during the tenancy.