Commercial property investors must stick to their principles on new acquisitions, or face the consequences, warns a Birmingham commercial property wealth manager.
Tim Matthews, Chief Executive of Blue Marble Asset Management (Blue Marble), says that with the commercial property investment market showing no signs of slowing down, it is now even harder to find any value in what is becoming a heavily mined field for the unwary investor.
Mr Matthews says: “After investment in Q4 2017 broke records in the industrial sector, and was the best outside London since 2006, and despite on-going Brexit uncertainty, there is no let up in the market. So, the temptation, in order to keep on investing, is to forget your original principles and ‘take a view’ on a purchase. This is a recipe for disaster!
“If you rejected a secondary industrial investment in the North East of England at a yield of 12% – 13% four years ago, then do not buy it now at 6.5%, which is exactly what we have seen some investors do. They are just buying income at the expense of future value.
“Most market commentators would agree that we are in the fourth quarter of the current property cycle which means that there will be another market readjustment. We just don’t know when. Unlike in 2009, lenders are now better protected, with much lower loan to value ratios, so it is largely investors themselves who will bear the brunt of any losses, particularly those who have favoured income over value.
“It is still possible to find value in the market, as our recent acquisitions have shown, but it’s even more important than ever to remain true to your original investment principles, or face the consequences in the future!”
Blue Marble’s recent acquisitions include three Grade A headquarters office buildings at Lichfield South in Lichfield, a health and fitness club in Bolton and an office investment in Rotherham.