Commercial property market buoyant in long term

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CBRE, the commercial property estate agents service, has made predictions about the commercial property market. The company forecasts a 4% reduction in property values this year, but expects a recovery starting in 2018.

CBRE.co.uk reported in April 2017 that commercial rents in the first quarter of 2017 rose by an average of 3.3% and should continue to grow in the rest of the year, though this growth should be steady rather than spectacular. There remains a high demand for commercial and semi-commercial properties, which suggests that investors are satisfied with modest capital growth and rental yields.

Miles Gibson, the Head of UK Research at CBRE said:

“Following an uncertain 2016 and with the potential for further change in the political and economic landscape in 2017, Q1 2017’s results continue to demonstrate the resilience of the prime commercial property sector. The quarter’s positive growth in prime rental values provides an optimistic outlook for the year.”

Mortgages for buying commercial and semi-commercial property remain low and there are plenty of lenders.

Buy-to-let property demand is down according to the Royal Institute of Chartered Surveyors, but rents are up in all regions except London and Scotland.

Residential landlords have faced increased costs due to the reduction of tax relief on commercial mortgage interest payments. Many are looking to diversify their property portfolio by investing in commercial and semi-commercial property. The commercial property market has many significant differences to the residential market. Landlords need to research the commercial market and take financial advice before committing to commercial property investment.

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