In 2017 commercial property investment in central London, particularly the city, has hit a 10 year high. Just when we’re all up in arms about the consequential lows of exiting the European Union, inflation and steep rise in prices, commercial property is doing very well indeed. One of the reasons it might be doing well is because, rather than facing unemployment, many people with an entrepreneurial taste for adventure have decided to their own businesses. SMEs, tycoons and investors, as well as large corporate firms looking to expand or relocate, are buying or leasing property in London, particularly the city of London.
As an investor, you need to weigh up the present economical state and what economists anticipate in the near future. But regardless of the state of the economy, there will always be investors and commercial property buyers, as well as business owners wanting or needing to lease premises to run their business. Investors, particularly those based outside the UK see the fall in the pound as a glaring opportunity, and so… have basically gone shopping! In March of this year a Hong Kong investor and property developer bought a commercial skyscraper in the city of London for £1.15bn – The Leadenhall Building. Also known as The Cheesegrater, this is a commercial property which homes businesses such as insurance broker Aon, who have relocated from Canada and leased 10 floors on 112 Leadenhall
The commercial property sector is a great opportunity to generate income and asset allocators are shrewdly taking a dip in the waters and generating business for themselves by becoming freeholders, as well as opening opportunities for business owners – leaseholders. As a buyer you can pick up a bargain, as a leaseholder you can also benefit if the freeholder’s rent rates are realistic in line with the present economical state. The Brexit vote and subsequent panic were a temporary financial burden that has begun to lift in the commercial property sector. There’s been an increase on stamp duty and new mortgage tax relief for residential property for people who buy to let. As a result, investors are now turning to commercial property which isn’t affected by the changes in taxation (yet).
How would you strategically plan the purchase of commercial property? You would need to think about who will be leasing the property and what type of business would be occupying the premises. Consider the rent you will be looking to charge in line with inflation and against your own profitability. You will also need to discuss with a commercial property lawyer how a lease should be drafted to suit the purpose of the building and to bring you benefits as a freeholder, as well as maintain the tenancy of your leaseholders without any disturbances. A commercial property lawyer will help you explore all avenues. Please give us a call for a first free consultation. By Sandra Garcao
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