Insurance News Archive

Investors 'continue to look at owner-friendly commercial property'

Commercial property will remain an owner-friendly asset despite new directives on energy performance, it is claimed.

Mat Oakley, chairman of the British Council of Offices (BCO), says landlords can enjoy long leases with "upward-only rent reviews" and do not have to worry about insuring or maintaining their building as this is the tenant's responsibility.

He states buying a vacant property is a gamble, whereas a shop on a high street with a "good quality retailer" already in place ensures rental income.

Mr Oakley suggests the majority of investors who purchase commercial property will do so with an income steam attached and so will only have to worry about risk every five years when the tenant has to leave or rent needs to be reviewed.

"It is an attractive assessment but you need to apply the same degree of diligence to selecting your asset as you would to investing in equities or anything else," he adds.

The UK Monthly Property Index for June shows commercial property returns are falling and on a rolling 12 month basis are said to have hit a record low of -14.9 per cent.

23 Jul 2008