According to a new survey undertaken by multinational financial services company, Legal and General Plc, commercial property still offers an exciting opportunity for investors,
The company has insisted that the UK’s commercial property market can be viewed with a degree of optimism, stating: ‘Exciting investment opportunities exist in commercial property despite a tough investment backdrop.’
Legal and General, Head of Research and Strategy, Rob Martin, declared at a briefing last week, there are still many varying opportunities available to investors. Martin stated, ‘a recovering economy, albeit gradually … points to demand and rental growth focusing on the best quality assets….A number of factors are currently favoring occupier markets in London and the South East .’ He added, ‘a restructuring of asset finance debt obligations is creating new opportunities for investors that may not have been available in the last few months.’
However, it was also suggested by Legal and General, that this positive outlook cannot be positioned in regards to all commercial property. Rob Martin, announced that he believed, the ‘lack of balance in the UKs commercial property market is likely to lead to a greater price differentiation with lower returns for lower quality assets.’
Martin continued, ‘modern, well-located retail assets’ would continue with good occupancy levels. ‘But we anticipate that poorer quality retail stock will experience weak demand and falling rents over the next few years, which is likely to require a pricing correction to restore value.’
It is perhaps with this report in mind that Legal and General have recently splashed out £14.8 million on a 51,182 sqft commercial property in the centre of Leeds. The building will house the company’s UK Property Unit Trust Fund.
Matt Jarvis, the UK Property Unit Trust Fund, Manager, said: ‘Acquired at an attractive yield. On Whitehall Quay represents an excellent opportunity for the value add asset management initiatives. We intend to reposition the property over the medium term with a view to creating one of the key grade A offices in Leeds City Centre. This transaction is in line with the funds long term preference for city centre office properties and we continue to seek similar opportunities.’
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