If this summer doesn’t prove a blazing success weather-wise, the UK’s commercial property investors will be exuding a healthy glow as they await a forecasted summer ‘bounce’.
A recent report by respected international real estate consultant Cushman & Wakefield reinforces how savvy buyers should be broadening their target range and portfolios to maximise the anticipated bounce.
The report highlights that prime yields have fallen to a current average of 4.88 per cent – with secondary yields dropping at a faster rate to 7.25 per cent.
Although this remains above average when looking back on the history of prime to secondary yield gaps, it is the tightest gap seen since 2011 and is largely attributable to a drop in prime investment opportunities causing a lift in interest for secondary stock.
Although supply remains the main barrier to increased activity in the housing markets, experts stress that the situation is changing for the better – albeit slowly – due to a healthy appetite to provide finance across a broader range of lenders and a wider market range.
Investment in offices and tenant demand has been strong in London and the bigger regional cities while tenant demand for prime retail space is also going in the right direction.
According to the report, occupier demand is likewise more encouraging for buyers – notably in the industrial sector which is enjoying a confidence boost as portfolio sales drive volumes and a healthy number of developments are in the pipeline.
ONS stats back this up with the news that March industrial output grew at its fastest pace for six months – the sector’s best performance since September 2014.
Our buoyant industrial sector is undoubtedly a welcome boost for commercial property investors for whom Vida Architecture sources opportunities to enable them to reap maximum returns on their investment
In more upbeat developments, a report from Barbour ABI says planning application floor space for factory construction rose across 2014 by 50% while increasing planning applications in manufacturing are undoubtedly a strong sign of long-term optimism – and a clear signal to investors that the sector is worthy of their financial commitment.
With the general election almost a distant shadow, let’s hope that the new government will build on some of the initiatives the previous Coalition introduced to support the manufacturing sector, which during the peak of the recession lost more than 100,000 jobs.
In its first quarterly survey of 2015, manufacturer’s association the EEF provides further evidence of growth across manufacturing at the start of this year. All the major indicators – output, employment, investment and orders – were positive in the past three months, remaining above their long-term averages.
Chancellor George Osborne’s Northern Powerhouse plan, which will pave the way for HS2 and give more power to the North’s cities, should be a further lift for both manufacturing businesses and investors alike.
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