press release splash

King Sturge

WEST PROPERTY INVESTMENT MARKET PROVIDES “SHELTER FROM THE STORM”

Commercial investment is bucking overall property market trends with a major increase in activity in recent months, according to a sector expert.
 
Simon Bennett, partner in the investment team at King Sturge in Bristol, says the past five months had seen a significant upswing in the market, with November recording the largest monthly rise in values for five years.
 
Mr Bennett told the firm‘s annual media briefing in Bristol that this was down to the fact that commercial property offered a “safe haven” amid the current economic uncertainty.
 
“Investors are currently seeking shelter from the storm, and in periods of uncertainty and low interest rates, commercial property offers an attractive average return of 6.5 per cent to 7 per cent on rental income alone,” he said.
 
“The main institutions such as Prudential, Aviva and Standard Life have seen their property funds proving extremely popular and they are looking to invest in prime quality, well let and well located commercial property investments, which has led to a significant increase in values and competitive bidding on some properties.
 
“For example, King Sturge recently sold Unite House in Bristol, a 495-bed student scheme let to Unite for a period of 25 years. It was sold to the Prudential for a yield of 6 per cent and the property attracted a number of institutional offers, which illustrates the current appetite for this type of secure property.”
 
Mr Bennett said values in prime assets for retail, office and industrial property have increased by up to 30 per cent from their low levels in mid-2009, but that poorer quality second hand buildings had not matched this, with investors more concerned over rising vacancies, falling rentals, vacant rates on empty buildings, and the financial difficulties of some companies.
 
“What we are witnessing is a two-tier investment market where prime assets perform well, and secondary and tertiary assets are proving more static in pricing,” he concluded.
 
“In simple terms, the current demand for property investment is exceeding available supply, and prices are increasing despite downward pressure on rental levels. In the long term we feel this imbalance is unlikely to continue.”

ENDS               27th January 2010

 
For further information please contact Neil Fraser, Sturgess Van Damme, on 01275 349011 or email neil@sturgessvandamme.co.uk
| More