Commercial property favoured by investors

Private investors are increasingly turning to commercial properties the latest figures show.

This is likely to have been prompted by the 3% stamp duty on second-home purchases introduced last April and also the higher returns in the commercial sector. The shift become noticeable in the second half of 2016 and is set to continue this year.

“Many private individuals with access to cash have identified interesting opportunities within the commercial market” Steve Berrett, Commercial Director at Michael Jones & Company commented, “We have seen this in recent months and we expect it will continue for the rest of this year.”

The trend is more pronounced this year because of the cuts coming into force this April to the tax relief that buy-to-let landlords can claim on mortgage interest payments.

“Many clients are now looking at commercial opportunities, which they wouldn’t have done perhaps before the stamp duty surcharge,” he said.

“Because of high yields, high income and lower maintenance costs, commercial properties look more attractive in comparison to other investments.”

This is demonstrated by a number of recent sales Michael Jones has made to private investors towards the end of 2016.

For example, we have sold a 9,000 sq ft retail and office building in central Worthing to a private investor for £1.9m at a 6.3% yield, and a mixed-use property in Littlehampton comprising retail, residential and gym space, to another private investor for £535,000.

The occupier market

Demand for industrial space continues, but this is coupled with decreasing levels of availability. Competition for small to medium sized units (1,000–10,000 sq ft) is high, and we have repeatably seen industrial space get snapped up in a matter of days.

The retail sector looks set to remain strong throughout 2017 and we anticipate that prime high street as well as out-of-town locations will remain desirable. We have seen an increase in ‘change of use’ being applied for, such as gyms, vets, restaurants, takeaways and bars.

The loss of office space to housing has had an impact on the market and we expect that buildings will continue to be converted or demolished in this way. Although this shortage of office stock results in less choice for occupiers, the general quality of office space should remain high.

For more information, please get in touch with our commercial team on 01903 201212 or commercial@michaeljones.co.uk.


Content accurate at time of publishing.

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