After what seems like a lifetime, it finally feels like we have justifiable reasons to be optimistic. The UK is gradually easing out of lockdown and as cases and deaths of covid remain at much more promising levels than they were at previously, the vaccine rollout appears to have been a success. So, what happens now?
The year 2020 and the beginning of 2021 brought with it a degree of uncertainty for almost every business on the planet. Granted, those that primarily operated online didn’t struggle and in fact had and continue to have record breaking returns but the shops on the high street, the property market and the hospitality sector, have all had a huge degree of uncertainty linger over them for the past 18 months.
That being said, the first signs of release seem promising as an abundance of customers who have been depraved on shopping on the high street have been returning in large numbers. The same can be said for the likes of pubs, restaurants and offices, all of which are beginning to fill back up. There are some changes that happened throughout the pandemic though that leave people questioning the validity of future investments, specifically, investments in the commercial property market.
Commercial Property Upon Lockdown Easing
Realistically, the year ahead promises the return of improved trading for commercial property investors. 2021 is an exceptional year to invest in residential property and there is no reason to believe commercial properties will be any different. That shouldn’t cover up the fact though that there will need to be some difficult discussions between landlords and tenants.
It was revealed last week by Land Securities (who are one of the UK’s largest development companies) that it has allocated £39 million in rent concessions to customers since April 2020. These conditions can be expected to improve though as retailers begin to reopen and trade picks up throughout the country, more and more people are likely to return to work. Not to mention, the governments rules regarding evicting non-paying tenants are set to end on 30th June.
Will Changes Throughout Lockdown Stick?
One of the aspects that makes a lot of commercial property investors hesitant is that there has certainly being a cultural shift throughout lockdown. One of the most prevalent aspects was the increased use in online shopping. Upon stores reopening, it appears though online shopping of course remains a viable option, people are still keen to visit the highstreets. Even if online shopping continued to take over, commercial property investment experts would recommend investing in empty warehouse space instead, as there will be a huge new market for this.
There will also likely be a need for the repurposing of office space. Whilst people are gradually moving back to the office to work, there are still 41% who are either working exclusively or part time from home. This number could well reflect a new structural shift, which an increase in residential property sales as people move to more rural areas, backs up.
Should You Invest in Commercial Property in 2021?
Even though the rates on commercial property ROI were down last year, this is a reflection of the year as a whole for most industries as oppose to a direct reflection of how the commercial property market is likely to look over time. The reality is that the income from real estate investment remains competitive once you weigh it up against the potential income that could be recuperated from government and corporate bonds.
As the pressures ease on tenants in a post pandemic Britain, the lure of commercial property investment remains, as it is an effective way of achieving a diverse investment income. Of course, if you are considering in investing in commercial property and have any questions you would like to ask before doing so, it would be prevalent to contact an expert in commercial property investment in order to get more information specifically catered to your circumstances.
Cengizhan Cerit is a Turkish/British businessman. He has a long-standing and successful career in both residential and commercial property maintenance, property investment and entrepreneurship.
He leads two property management firms, SISI Property Ltd and Meden Ltd that he operates out of Ashford and London. With his strong interest in culture and business sectors, he continues to successfully develop both of these property firms.
Cengizhan Cerit is constantly updating his website with regular content covering all aspects of property investment, management and entrepreneurship.