If you are looking to sell commercial property in the UK then there is finally a glimmer of light after a prolonged market slump, as reported on Propertywire.
According to data released by HMRC, the number of commercial property transactions has increased by up to 24% from a low of 92,900 in 2008/2009, but it is still well below the 139,00 in 2007/2008.
The figures have been looked into by commercial law firm EMW, who have suggested that England is dominating the UK commercial property market at the moment. There were around 97,500 commercial property transactions in England last year, accounting for 85% of the UK total, this is the highest figure since 2007/2008 when there were 115,700, 83% of all commercial property sales in the UK.
As the report explains, the fairly high yields on property when compared to other investments, continues to attract investors from both the UK, and increasingly, from overseas.
Nick Marshall, principal at EMW commented: “Commercial property assets are proving increasingly attractive to investors looking for higher yields in an environment with record low interest rates and this is driving activity towards pre-credit crunch levels.”
“There has also been a surge of interest from overseas investors, with the UK offering investor friendly lease terms. The relative shortage of vacant prime office space in central London is also making the market more attractive to investors.”
“Bank lending has also picked up which has led to more activity in the market and lenders are now happier to fund purchases at higher loan to value ratios. Without higher LTVs, many property investors were finding it hard to get the economies of their investments to work”, he added.
Additionally, according to the most recent Commercial Market in Minutes from Savills, downward pressure prime yields is set up once again to commence across six different sectors of the market, while rental growth and income will begin to drive the total return.
Savills is predicting downward movements on prime yields to return once again across M25 offices, provincial offices, high street retails, shopping centres, industrial distribution and industrial multi-let, mostly driven by a lack of new stock entering the market.
The West End and City office prime yields are currently at an all-time low at 3% and 4.25% respectively, compared to 3.25% and 4.25% in May last year.
This is, however, dissimilar to the early phases of the UK’s economic recovery which saw investors rely on an increase in capital value to produce total returns, Savills claim that the market will have to shift its focus onto income return and rental growth.
The firm is suggesting that this is a clear indicator that the market has moved on as a rate of capital value begins to slow from its peak of 12.95% in October 2014 in comparison to a current level of 11.04% for the year to end of May 2015.
Matt Oakley, commercial research analyst at Savills commented: “Rental growth is no longer just a London story and while office and retail in the Capital remain at the top, an outward ripple of recovery suggests strong prospects for rental growth across an array of sectors and regions. As we have seen before, this will benefit the South East and key regional cities before the rest of the UK.”
In support of this the report states that the majority of the top nine regional cities are currently experiencing an upward pressure on price office rents due to a 10% rise in leasing activity and a 10% fall in availability over the past year.