Do you invest in commercial property?
According to new research, the number of property investment companies becoming insolvent rose 8% in the past year, and increased from 154 in 2011 to 346 in 2015.
This seems to be due to the rise in property prices, higher occupancy levels and rental increases for offices in London and the South East.
Savills estate agents report that rent for West End office space rose by 21.6% in 2015, while occupancy increased by 58%.
The rise in asset values has been driven by international investment. During the first six months of 2015, 70% of the total investment in commercial property in central London was from foreign investors, totalling £9 billion.
According to Savills, investors are from the UK, Middle East, US and Asia, particularly Taiwan. Chinese investment represents 11% of the total, despite their slowing domestic economy.
During the recession, banks were reluctant to put property investment companies through insolvency procedures in case it further depressed weak property prices.
But now, banks have begun recouping the value that has been tied up in bad debt since the credit crunch, by having investment companies sell their assets.
Crystal ball time
Savills predict that UK GDP growth will remain at about 3% during 2016, and that investors will continue to be selective, looking for a secure income stream or rental growth.
They say prime and average London office and retail space will continue to deliver strong performance, but the pace of growth in the City and West End may slow over the next few years, with emerging markets including Croydon, Brixton and Stratford.
Outside London, they expect retail growth to be higher than recent years, while still lagging behind office and industrial units.
Rents should increase for new-build and refurbished offices in regional markets.
Due to dwindling brownfield land within the M25, and relaxation of permitted development rights (which could give the option to convert to residential), urban industrial estates will continue to perform well.
There was massive growth in the distribution warehouse market in 2015, and Savills think that rents for logistics space will continue to improve, although probably not at the same rate.
DG Law were fantastic throughout our purchase process. We had a short, fixed, timeline to
Venetia Lawson-Cruttenden [solicitor] is fantastic! She is always so thorough and efficient and gives you the
DG Law supported us through a very difficult contractual negotiation to achieve exactly the outcome
We were very pleased with the way that DG Law helped us on our transaction
Thanks for all the help from DG Law in pulling together our somewhat complicated loan.
DG Law resolved a difficult lease renewal for us and their services were excellent –
I needed understanding and experienced legal advice. DG Law provided an excellent service at a
My experience was second to none – the service was professional and personal. DG Law
DG Law always step up to the plate on our transactions and handle the various
DG Law was recommended to me and my partner and I received excellent advice –
Having worked with DG Law a number/couple of times now, I have been really impressed
DG Law were constantly at hand, and kept pro-active throughout the thorny process of getting
DG Law organised and ran a very useful session to help to make our team’s
DG Law came recommended to me and whilst setting up a new business it was
We were recommended three lawyers to handle the sale of our seven year old successful
We live by our core values of transparency, flexibility and being honourable – every day
We put ourselves in your shoes so we understand your problems from the inside out
We deliver our advice in a way that is easy to understand