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Outlook looks bright for commercial property
Published November 4th, 2014
With the economy improving and interest rates likely to remain low the outlook for commercial property looks positive.
According to Duncan Batty, commercial property specialist with Berrys in Northamptonshire, there is pent up demand for commercial property.
“Our Towcester office has seen strong levels of enquiries during the summer months and we have witnessed a high number of properties being sold, subject to contract completions,” he said.
“As the winter approaches the level of enquiries is starting to slow slightly but still remains strong in general.”
Even if interest rates do increase, the rise is likely to be gradual, which won’t be catastrophic and in any case he points out that history demonstrates to us that UK property initially benefits from rising interest rates.
The other important influence on the property market is bank lending and a Treasury-commissioned study recently found that the lenders had much to do to win back trust and provide better value-for-money, particularly on lending to small to medium businesses.
“Following the study, Q2 saw a net expansion in medium size businesses borrowing which is 38 per cent higher than over a year ago,” Duncan said. “ There has also been a nine per cent growth in cash held by SME’s in current and deposit accounts from this time last year.”
Rental values have steadily increased and the most recent Investment Property Databank ( IPD) survey shows a 2.2 per cent increase to commercial property over the past year which indicates that the UK is on a steady path of occupational demand recovery.
“The IPD survey also showed that the value of incentive packages continued to fall and I have seen this first hand with recent offers being accepted which have a noticeable drop in the level of rent-free periods or lower initial rents, if stepped,” he said.
Capital values too have steadily increased from the lull at the end of 2012. The most recent IPD survey shows commercial property values increased by 11.9 per cent over the past year.
“Even so, values are still 26 per cent below the peak of the market, and the level of capital growth is not expected to continue for the rest of the year but to remain stable ,” Duncan said.
“The outlook is definitely positive for the commercial market but as with all property, quality is paramount and the commercial properties in the best condition and location will be the first to let and to sell,” he added.
For more information contact Duncan Batty at the Towcester office of Berrys on 01327 356148, email: email@example.com