I was recently looking at a property investment article, in the Financial Times, regarding all aspects of commercial property. It was dated 1995 and the headline read, ‘Commercial Property Is RED HOT!’
They were indeed 100 percent correct. I know this because I myself burnt my fingers on the commercial property market. The headline screamed, ‘buy, buy, buy and set up trust funds for your children now. The article went on to say, those that didn’t get in to the market straight away, were going to lose out.
Let us fast forward to around this time last year – March 2010. Again the Financial Times, again an article on commercial property. On this occasion though, a very different headline, with a very similar message. ‘We have hit rock bottom. Now is the time to buy.’ The headline is followed by another bullish rant about buy, buy, buy. From here we can only go up. The article states that the commercial property market is 10% under subscribed and serviced office rent is the lowest it has ever been. This is the turning point that we have all been waiting for.
To top it all, last week’s Financial Times read, ‘Commercial Property Prices Set To Tumble.’ Who are these people? The Michael Fish of property predictions? How can reputable papers like the Times get it so wrong, so consistently? Why did they think that commercial property prices were going to rise? Who was going to buy/rent these offices, factories and shops? Government stats now state that approximately 13% of all commercial property is sitting empty. A good investment? I think not.
Now, we have to ask ourselves, will it continue to drop. The trends certainly point towards stagnation rather than a dramatic swing either way. So, if I had to pass any sort of recommendation, I would say rent in the short term. Stand back and take a close look at what’s happening out there before you get tied into a slowly shrinking market. I can almost guarantee that property is not going to miraculously start doubling overnight so we all have enough time to be cautious over our next steps.
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Something New In The Commercial Property Mortgage Market
