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Hot property for shrewd southern investors
Industrial premises throughout the south are currently hot property for shrewd investors, according to Justin Beacham, Associate Partner of commercial property consultants, Vail Williams.
He says many investors have been increasing their weighting in commercial property as a result of the poor performance of equities in recent years and strong returns seen in the commercial property sector. More recently Vail Williams has seen an increased urgency to acquire certain types of property as investors sought to invest funds before the upward movement in base rates.
Mr Beacham continues: �The industrial sector is currently the most popular with investors, who anticipate stronger levels of rental growth and are attracted by the favourable initial yields of 7% plus, compared to 5�% for prime retail and 6�% for prime offices.
�Demand in the industrial sector is currently focused on well managed industrial estates in strong distribution locations or multi-let industrial estates with numerous asset management angles, such as rent reviews, lease renewals, redevelopment opportunities and planning angles, where investors can get a good return on their money.
�Retail is the second favoured sector for investors, with demand focused on buildings in prime locations, with 12-15 years remaining on the lease and a strong covenant. Premises with asset management angles such as shops with offices or residential accommodation above are also popular.
�Offices are currently the least favoured sector for investors, as office rents have been moving in a downward direction for a considerable period of time. Investors have been reluctant to purchase offices with short unexpired lease terms and instead have been focusing on premises with long leases and strong covenants. However, recently a number of investors are starting to look at offices where there is only 3-4 years remaining on a lease, believing that rents must be close to their cyclical base point and now is a good time to purchase office investments while taking advantage of discounted yields.�
As for next year, Mr Beacham concludes: �Investment demand in the industrial sector is predicted to remain strong in 2004 and investment in the office sector may strengthen in time on the back of a very slowly improving US economy.�
For further information please contact Neil Bowron, Vail Williams on tel. 0118 933 5648; email [email protected]; or visit the web site
www.vailwilliams.com
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