LIFESTYLE

Certainty in an uncertain world – post-Brexit investors turn to commercial property and fixed returns

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  • 20% increase in commercial property enquiries since EU referendum (Properties of the World)
  • Residential buy-to-let yields averaging just 5% (Zoopla)
  • Commercial property offering everything from 10% returns (CaerRhun Hall) to fixed returns for up to 25 years (Wagons Way)

1Visionary property investment consultancy, Properties of the World, has reported a marked increase in enquiries regarding commercial property investments, following the UK’s decision to leave the EU.

Investors are searching for certainty in a newly uncertain world and for many the answers lie in the fixed rate returns offered by UK commercial investment opportunities such as care homes and student accommodation schemes.
Jean Liggett, Founder and Managing Director
of Properties of the World, explains,

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“In simple terms, fixed returns mean certainty, and that is precisely what an increasing number of investors are looking for right now. We’ve received a 20% uptick in enquiries for commercial property investments since the UK’s Brexit vote.

“Buyers like the fact that hotels, student accommodation and care homes offer fixed returns over five or more years. The fact that the return is considerably higher than residential buy-to-lets further adds to the appeal. This is a proven market experiencing increasingly strong demand.”

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Investors in Wagons Way care home in Washington, North East England, for example, can look forward to fixed rate rental income of 8% per annum for up to 25 years. With a purchase price of £58,500, the 58 bed facility offers ROI of up to 225%. With bank savings generating returns of up to 1%, it’s easy to see why many people are choosing to use their savings to buy commercial property, which offers far greater, fixed rate returns.

Fixed rate returns provide peace of mind and mitigate risk. The world as we know it may be experiencing major upheaval, but that only serves to make fixed rate investments more appealing.

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Properties of the World’s Jean Liggett continues,

“With fixed rate commercial investments, investors know that they will get an 8% return (for example) year in year out. With residential buy-to-lets the returns aren’t fixed and many buyers are afraid that they could end up out of pocket, particularly with so many unknown economic and political factors coming in to play over the next two years as the UK disentangles itself from the EU.”

Jean cites Dye Works in Bradford as an example. The contemporary student accommodation scheme offers a three year fixed annual income return of 8%, with a 6% coupon during the construction period. A limited number of single rooms are available for investment from £65,000.

The other attraction of commercial property investment is the fact that it is fully managed and doesn’t incur extra costs. Buy-to-let landlords run the risk of tenants damaging their properties, void periods and repair bills when something goes wrong, as well as having to stump up for the cost of insurance. A hotel investment mitigates all of these risks, ensuring that the buyer is not suddenly out of pocket due to redecoration costs or a lack of tenants.

At CaerRhun Hall in North Wales, investors can enjoy sitting back and making money while having nothing to do with the management of the hotel. Their £50,000 investment generates 10% returns per annum, far surpassing average buy-to-let yields, which stood at an average of 5% across the UK for the period from 01/01/2015 to 18/02/2016, according to Zoopla. Plus, investors in CaerRhun Hall can enjoy the added bonus of two weeks’ usage of their hotel room every year.

Properties of the World’s Jean Liggett concludes,

“The uncertainty caused by the Brexit referendum isn’t going to go away anytime soon, so it follows that commercial property investment is going to enjoy a sustained surge over the next couple of years as buyers seek out certainty in an uncertain time”

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