2018 in preview: Alex Reid, Mather Jamie
Alex Reid of commercial property agent Mather Jamie gives us his three business predictions for 2018.
1. Nationally, investors will continue to see property in general as a safe option. We will see buy-to-let landlords continuing to expand their commercial holdings, given the ongoing changes in tax treatment of their residential holdings. We will continue to see investors/developers building small residential developments to let and hold, creating company-held PRS investments. The ongoing demand for investment will see an ongoing shortening of yields, as cash buyers and pension funds able to secure 5-8% from commercial property continue to see this return as preferable to less than 1% in the bank or a jittery stock market at the vagaries of international forces.
2. There will be an ongoing clamour for industrial units locally, both freehold and leasehold. Whilst there has been notable large scale warehousing built in the region, there is still comparatively little in the way of development in smaller industrial premises. Anecdotally, we have seen several small and medium sized commercial premises spark fierce bidding competition, with all bids exceeding the asking price. This illustrates the massive pent-up demand that exists for smaller sites in the area.
3. Landlords will continue to see significant growth in their rental income from a number of their stocks as demand improves and supply continues to shrink. However, those heavily invested in retail property may continue to see the returns and capital value of their portfolio under pressure. There will be exceptions to the rule, but large amounts of the retail stock locally will remain under pressure.