Coronavirus should not scupper commercial property investment
PUBLISHED: 09:44 27 May 2020 | UPDATED: 09:44 27 May 2020
Guy Gowing, managing partner at Arnolds Keys, offers some expert tips on commercial property investment during Covid-19.
As the economy faces the biggest fiscal squeeze in living memory, talking about investment might seem counterintuitive. The current stock market seems only for the brave, while interest rates of 0.1pc raise concerns about the current value of traditional investments.
The investment market has been shaken during the last few months – but that does not mean that there are not opportunities for investors willing to chase them. There is still plenty of capital in the market, and investors are looking to the commercial property market. As well as offering significantly better returns than many other investment categories, property is seen as a haven in these troubled times.
The key is to pick the right type of commercial property investment. Perhaps the safest bet is agricultural land, given the renewed focus on food security and the relatively minor effect of coronavirus on farming activity.
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Warehousing is also looking attractive. This has been a boom area for some time due to the seemingly unstoppable march of online shopping and the shutdown of bricks-and-mortar retail has only accelerated this trend.
That doesn’t mean that retail property is a no-go area for investors. But it does mean that choosing the right kind of retail premises is vital: local convenience shopping received a shot in the arm from the crisis, while comparison high street shopping has been hit very hard. Once again, the Covid-19 crisis has exacerbated a trend long established.
Office investment is another nuanced area, with commentators saying that the big office building has had its day. But research shows that there is a real appetite for face-to-face working in pursuit of idea sharing, team camaraderie and motivation. Savvy investors will seek out quality above all – and, with a dearth of such buildings in Norwich, demand will continue to outstrip supply long term.
The crisis has also thrown specialist investment classes such as medical premises into focus. This has been something of a Cinderella area for investors, but we can expect to see it become more mainstream.
The commercial property market is an effective mirror of the wider economy, so we should take some comfort from the fact that there is still a good level of demand from investors.
For more information please visit www.arnoldskeys.com
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