Portfolio Owners Move To Commercial As PRS Gets Tougher – LandlordZONE

Featured Sponsor

Store	Link	Sample Product
UK Artful Impressions	Premiere Etsy Store

Owners of large portfolios are feeling optimistic despite the difficult economic climate, with many looking to the commercial sector to buy their next property.

He Handelsbanken The survey of professional owners, based on research among large UK investors with an average of 29 properties worth £14m each, found that 59% expect to expand their portfolios, while just 14% expect to sell. some or all.

More than half (57%) of those looking to buy property plan to diversify into new sectors, with offices (43%) attracting the most interest as investors seek to take advantage of depressed valuations.

The strong interest in commercial offices is surprising given the uncertainty surrounding post-Covid 19 office occupancy and the rise of work-from-home, Handelsbanken says.

Correction

However, as stocks have experienced a correction in recent years, many investors will likely look for opportunities to buy at reduced cost with an eye toward longer-term value creation, asset reuse, and/or early capitalization of assets. changes in work patterns. towards more use of the office.

james sproul (pictured), UK Chief Economist at Handelsbanken, adds: “Commercial property values ​​experienced a major correction in the second half of 2022 as a direct impact of the higher interest rate environment.

“Average retail property prices were down 15%, office prices were also down 15%, and industrial unit prices were down 25%.”

Three-fifths of those who expand their portfolio aim to buy in new regions, according to their survey. London was cited as the most attractive region over the next 12 months by investors (27%), followed by the South East (26%), while Yorkshire and the Humber and West Midlands only attracted 9% interest.

Three-fifths (60%) of respondents have had rent deferral/lease renegotiation requests, while more than half (54%) have seen the number of empty months increase in the last 12 months.

Read more: Safeguard your commercial property.