Since 1946, residential property prices across the UK have risen by almost 12,000 per cent, equivalent to an average annual compound increase of roughly 8 per cent. However, the facts about commercial property – offices, shops and industrial buildings – are less well known. Over the same period, commercial property prices have risen by only 800 per cent, or 3 per cent as an annual average. So the ratio of residential to commercial property prices is now about 13 times what it was some 65 years ago.
How do we explain these radically different trends in the two types of property? Residential living space is something that we demand more of as we grow richer. Indeed, even without the current huge tax privileges to owner-occupiers, the proportion of our income that we wish to spend on it probably rises as we become richer.
By contrast, commercial space is a business cost that firms seek to minimise. Moreover, technological progress has helped them to do so. In offices, computers and communication technology have hugely increased the output possible from a single deskspace. The ability of some staff to work from home, or on the move, has enabled firms to reduce the number of deskspaces per worker.
In retail, the dominant technological development is the internet, which is eating away at traditional high street shops. This, combined with current economic weakness, is why we see so many empty, boarded-up retail premises.
This is quite obviously a huge opportunity – the disparity between the prices of residential & commercial property coupled with the government’ relaxation on planning laws when converting from commercial to residential mean that it must be the hottest way to invest your money at the moment.
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Political Office: Lib Dem Commercial Property Move
My company is looking to convert unused storage space above shops into residential accommodation. This will mean that landlords will gain greater income from their property, the housing crisis that is prevalent at the moment can be eased as more people can get on the property ladder, and more people will be using the local facilities. It is not an easy fix, however, with less houses being built we must find new ways of housing people. Would welcome comments