Opportunities on a small island

Harris Lamb's Alex Eagleton
Harris Lamb's Alex Eagleton

By Alex Eagleton, senior surveyor at Harris Lamb

As the UK’s commercial property market becomes healthier by the day, with developers stepping into the breach to fulfil stock demand and landlords overhauling sites to attract bigger and better occupiers, overseas investors have firmly set our island in their sights to cash in on the opportunities it offers to them.

While some UK investors have shown some reluctance to commit to home-grown property opportunities post-Referendum vote, those overseas see much less risk, with a huge amount of value being placed on the UK, thereby putting those with high-quality commercial property to sell in a very strong position.

Why else would, for the first time, the British Government have taken on exhibition space at MIPIM earlier this year, unless is was with the express purpose of showcasing the UK to the 3,500 investors visiting the event in search of their next project?

Better news yet, for us at least, is the spike in interest from investors wanting to snap up opportunities within the heart of the country. While the capital is notoriously expensive, the Midlands’ reputation for providing better rates of return proves increasingly attractive.

The past 12 months have been very active in the sector, with funds and investors showing a keen, continued appetite for commercial property investment.

There’s been a particular trend for investors choosing to enhance their portfolios with part- or fully let industrial sites. A combination of secure, stable tenants on and rental growth opportunities make such acquisitions a lucrative, long-term asset.

Demand for multi-let industrial is particularly strong if priced correctly – Harris Lamb’s investment team sold an estate last year having received 12 bids, while within the past couple of months we’ve bid on such an estate for a client and found that competition was high, with more than 20 bids on the table.

Similarly, office buildings with established tenants represent lucrative investments for those building up a portfolio of high quality office locations outside the capital.

As a business we’ve overseen acquisitions across a number of Midlands sites ranging from £1.5m to £16m in a variety of locations spanning from Redditch to Nottingham.

Investors are particularly keen on estates and buildings with rental growth opportunities, such as those buildings let below market rent. Such opportunities have become more prevalent as deals completed during the recession at lower levels are potentially now up for renewal, with rents set to increase along with profit margins.

Longer income without breaks is seeing the most competitive bidding of all, where clients’ expectations are routinely exceeded, and on larger investments of £10m-plus, we’re experiencing a variety of bidders, from UK funds, high net worth individuals, property companies and overseas investors, each competing for secure, long-term opportunities within the marketplace, and thereby soundly dispelling any fears that the market is at risk of stagnation.

All in all, there is more investor/trader activity than we have seen in a long time, with purchases of shorter, riskier income investments from cash buyers.

Ultimately, we’re set to exit 2017 on a high, and UK investors seeking more bang for their buck should look to their foreign counterparts for guidance and have more faith in the opportunities on home soil when it comes to enjoying the returns on offer.

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