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Grade A UK commercial property about to rebound

16th February 2008 | back to article listings BACK    print this article PRINT

The latest data from Investment Property Databank shows that high end commercial property, while still recording a -1.6% total return in January (rental return plus capital growth) this is a long way from the -3.7% recorded in December. The vulture funds are getting ready and are fairly fully funded now and we would predict them to start spending money in anger around now.

If you're going to get into this top end type of commercial property now would be the time to look at real estate investment trusts (REITs) that are massively undervalued compared to the property value within them. It would also be an interesting time to look at open-ended property funds. For most private investors this is the only way in is the type of assets recorded by the IPD typically start around £10 million plus.

It was a short sharp retracement in quality commercial property prices that was triggered by the credit crunch but these type of assets have extremely reliable rental incomes underpinning them and we expect them to restart a steady positive return by the second quarter this year.

We've always been bullish on offices in the UK due to the strong economy here and again we're seeing offices as the strongest sector within commercial property within the IPD data.

Stuart Law

This news story has come from the property investment blog by Stuart Law, CEO Assetz plc.

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