The momentum in the commercial property investment market remains unaffected both by the General Election and Brexit, according to Birmingham-based specialist real estate asset management company, Blue Marble Asset Management (Blue Marble).
Blue Marble Chief Executive Tim Matthews says: “The decision by Teresa May to call a snap election has had no visible impact on market activity which most likely reflects the consensus view that the outcome will be another Conservative government.
“The commercial property market also seems to have successfully weathered the issue of Brexit as an unsettling factor as investors still look to invest heavily in the sector.”
According to Mr Matthews, the industrial sector continues to outperform the other main sectors. He says: “Industrial capital values increased 0.6% and rental values increased 0.2% in April 2017, against the other sectors where there was no growth.
“As a result of the weight of money going into commercial property compressing yields and driving up prices, and the strong performance of equities, commercial property is now underperforming against other investment classes.”
The UK Commercial Property total returns for the 12 months to the end of April 2017 stood at 4.3% compared to equities at 20.1% and gilts at 8.4%.
Mr Matthews continues: “However, because there seems little likelihood of any short or even medium term significant rise in interest rates, as long as there remains an arbitrage between the cost of borrowing and the return on commercial property investment, it is likely that current returns and prices will be maintained and this, plus the almost non-existent rates of interest for cash savers, will continue to fuel investment demand in the commercial property sector.”
