Commercial real estate: what to invest in the UK
Experienced investors acquire not only residential real estate, but also commercial one; this is especially true when it comes to the most popular countries where this type of investment has flourished for many years in a row – the UK is one of such world centers.
Today, the leaders in commercial real estate are the United States, Austria, Germany and the United Kingdom. And in the European ranking, business facilities in central London occupy fifth place. According to Savills, among investors in most countries, residential property remains the most sought after, and the share of transactions with commercial square meters in the Russian buyer does not exceed 10% of the total volume of transactions. Experts associate such a considerable indicator with the needs of investors who not only want to own premium real estate, but also receive regular income from it.
Office property in the UK
The past year was the most successful in the last decade for the global commercial real estate market and took second place in the rating of investments in this type of real estate with an indicator of $ 224 billion. In 2018, office real estate was recognized as the most popular segment among investors. According to Knight Frank, the share of investments in offices around the world amounted to 36% of the total volume of transactions – in monetary terms, this figure reaches $ 330 billion. 22% and 17% respectively accounted for global demand for apartments and retail real estate. The current trend is expected to continue for some time.
However, in the UK the issue of office real estate is quite different than what can be observed in other countries and Brexit played a decisive role in this. It was after his announcement that a large number of international companies began to withdraw their offices from central London, which were previously 100% stable leased. The owners of this type of real estate in the British capital then had to search for tenants for a long time, and not finding them, they began dumping. Therefore, investments in office real estate in London are now more risky than ever.
Then another trend emerged – many traders were afraid that the London Stock Exchange would lose its significance due to Brexit and as a result moved their offices to Manchester and Liverpool – in these cities comfortable office clusters have been built, the contents of which are much more affordable, than in London. Some experts believe that now buying office property in the UK is not the most sensible act.
Comprehensive offers for investors
But among foreign investors, package investment offers are in great demand when a small building is purchased for £ 9-10 million, in the territory of which there are several apartments (usually 5 or 6 – two apartments on each floor), and on the first level there is a restaurant or shop with an area of about 50 sq.m. Typically, such objects are taken when it is necessary to increase the value of a particular property.
At the same time, the current / unprofitable tenant is usually “politely asked” under the pretext of repair, which soon begins – in addition to updating the premises, another floor is often completed, thereby increasing the profitability of the object – it sometimes reaches up to 9% per annum. It’s difficult to buy a restaurant or a shop in London now, and through such complex offers it’s quite possible, especially since they also involve the services of specialists (accountants, erists, etc.), thus taking on the whole work.
Parking lots in the capital city of London and its environs are managed by a large British developer, who is accredited at airports (it was there that most of the new parking spaces were erected) – this strategic land is registered in the state leasehold. Lots of land that is located around the airports practically do not come across, since there is no new construction and new offers – most agencies are on the waiting list. The annual income for parking is an average of 8% for owners, and the cost of one outdoor parking space is around 25,000 pounds. It is possible that some offers will appear on the secondary market, but they will already be paid an extra charge of 5-6%.
Student Housing Investments
Now in the UK two more sectors are actively developing related to real estate investment: student housing and nursing homes. As for student housing, here the rules of the whole world are dictated by British education, which remains one of the best in the world, making it one of the most famous and attractive. Today, having a British education is prestigious all over the world, so a large number of foreign students come to the UK.