Property is one of the longest established and most diverse of alternative asset classes. From homes to office buildings, it has a long track record in delivering income and capital gains while being relatively uncorrelated with equity markets.
Since the announcement of the lockdown roadmap, there has been a notable upsurge in commercial property activity. The number of international investors keen on capitalising on the United Kingdom’s commercial spaces has increased and, as retail/hospitality reopens, commercial property remains a favourable investment.
A fresh outlook
The repeated lockdowns meant UK property funds and trusts had a difficult year in 2020, but there are signs of tentative improvement as offices, shops and restaurants – the bedrock of the commercial property sector – gear up to re-open. A total of £2 billion worth of capital was invested into UK commercial real estate during February 2021, with overseas investors accounting for half of all investment activity so far this year, according to Colliers’ latest Property Snapshot.
Logistics & retail parks
The seismic economic shift instigated by the pandemic has opened new opportunities for the sector. Single-let logistics properties are becoming particularly sought-after due to a marked increase in online retailing and supply chain enhancements.
This alternative use case for property assets should be a prominent theme in the future, with potential for retail warehouses/parks to be converted into distribution warehouses. Units on retail parks that are let on low, sustainable rents and are operationally a strong performer for the essential retail tenant are the ideal proposition.
A bright future
There is ample dry powder ready to be deployed into UK commercial real estate, however not being able to travel and view assets is creating a real backlog. Many investors are focused on an active second half of the year once travel bans are relaxed and the vaccine has been rolled out more extensively across Europe and the rest of the world. Long term assets such as student housing and BTR alongside prime offices and logistics will be at the top of many wish lists as the market starts to open up in the coming months.
At Targetfollow, we’re thrilled that despite the obvious changes to the landscape, the commercial property market continues to be distinguished for its long-term stability through a steady ROI and scope of future growth. We look forward to a busy 2021, so be sure to frequently visit our website and follow us on Facebook, Twitter and LinkedIn to stay abreast on our latest acquisitions and sales.