You may possibly have made some money from the residential property market and now you want a change. Some investors will keep away from commercial property altogether because it involves a lot much more thought and managing than a residential property that you are going to do up and sell on. However, you might have decided that you will need a change and want to at least gather some information on commercial property investment in the UK.
Individuals who don’t bother obtaining some sound guidance on property investment can often lose a lot of money on the commercial property market. Just before you even look at commercial property you really should get some advice on commercial property investment in the UK. Commercial property law is various to residential property law. When you invest in residential property you will usually be required to take out building insurance by your mortgage provider – it is the same with commercial property investment. In the commercial market however, the insurance requirements are distinct to those concerning the residential marketplace.
Commercial property investment in the UK or elsewhere is quite different to other property investments and advisors really should make investors aware of the risks as well as the opportunities for investment in this region. The overall value of commercial property for investment is much lower than the value of residential properties with a total equities value of £1,148 billion (figures for the end of 2002). Investors in commercial property investment in the UK come from several various walks of life and acquire commercial property as part of their investment portfolio for several different factors.
There is a considerable amount of overseas cash that is tied up in commercial property investment, UK figures for 2002 estimate that of the £6.6 billion overseas money, half of that was invested in offices. Commercial property investment for UK investors has been driven by pension issues and the equity market.
Commercial property is spread over three key areas retail property such as shops, supermarkets and shopping centres, offices and enterprise parks and industrial property industrial estates and warehouses. Parks, leisure centres and restaurants and pubs are a lot smaller sectors of the commercial marketplace. The acquire to let marketplace is also component of the commercial property marketplace and differs from residential get to let in a number of areas. Tenants of commercial property often sign significantly longer leases than tenants of residential property. In the residential marketplace the landlord is responsible for maintenance and repairs but in the commercial marketplace the tenant has responsibility for this. In the residential sector property accrues capital value even though commercial property value is in income.
Undoubtedly there is a growing interest in commercial investment property, UK investors with reasonably very good portfolios are now wanting to add commercial properties. The income is higher from commercial property investment, UK investors are realising that they get a greater, immediate return and this income is greater than the equity growth in the residential marketplace.
Just as in the residential marketplace commercial property is offered on a freehold or leasehold basis with most leases being lengthy term. If the lease is running out on commercial property then the tenant who rents from the investor may well be entitled to renew his or her lease with the original owner. At times there might be much more restrictions on a leasehold property than on a freehold 1 – all that may possibly contain restrictions concerning any effects on other people. The commercial property investment UK market, is driven by property investment businesses who look for commercial properties that match the requirements of the investor.
In recent years there has been a rise in the number of commercial property lots going to auction. Some of these may be perfect for those testing their feet in commercial property investment in the UK.