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 spaces 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 fourth 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 in capital cities, investors can still gain value when they invest in regional parts of the UK as well. 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 spaces
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 spaces 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 for sale. 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 spaces 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 size 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.