subject: The Right Time to Invest in Commercial Property? Why It's Right Now! [print this page] The Right Time to Invest in Commercial Property? Why It's Right Now!
The commercial property market has seen few years as difficult as 2009 and 2010, the growing number of vacated shopping parades, and empty business parks and offices bear witness to the extent of the recession in this sector. There might be some light at the end of the tunnel however, as indicators suggest a recovery in commercial letting.As the first slow signs of recovery in the British economy become evident, information gathered by a leading UK property group suggests that there is some room for optimism. This, combined with the fact that the government has come to an arrangement with the banks to allow more commercial lending, is all good news for commercial mortgage lenders and borrowers.The property index has shown that in spite of predictions that the property market would see a fall in the first part of 2011, it actually saw a slight rise. OK, it was less than 1% but it was a rise nevertheless. Central London offices led the recovery with a capital growth of 1.1 per cent and total returns of 1.5 per cent in February. Another sector that helped nudge the figures upwards was retail warehouses, which showed a capital growth of 0.5 per cent in February 2011.A spokesperson recently made comments that the confirmation that growth is increasing was an encouraging sign that the market is beginning to recover after a long recession. It was also pointed out that despite the many experts that in late 2010 predicted that the retail sector would struggle, it's actually doing much better than was thought, which is promising news to many businesses and those who have been waiting to invest in commercial property using a commercial mortgage.The Royal Institute of Chartered Surveyors also seem to agree with the general trend presented by CBRE's figures. Nearly a fifth of surveyors questioned recently said that they believed activity in the commercial property sector would increase in the next few weeks whilst a significant number of others thought that commercial property was heading for its 'best quarter since 2007'.There is also room for optimism in the availability of loans in the commercial mortgage market. Greater access to commercial mortgages and other lending is also destined to help revive the commercial property market. A target has been set by the government of 76 billion to lend to small businesses has been set in 2011 - this is a 15 per cent increase on 2010. Also as part of the Government's 'Project Merlin' scheme, 11 billion of additional commercial mortgage lending has been agreed for this year.When this lending should begin in earnest was never really made clear, but a pickup has already begun, no buoyed by the news of Project Merlin discussions, in fact it might just be the final hurdle on the march to recovery. January data from the Bank of England already revealed an upsurge of 1.1 billion in business loans to SMEs, a 2.6% growth from the last quarter, and this was before Merlin was finalised.As interest rates are still very low, this is helping greatly while property prices, although increasing, are still also low. The combination of the low prices and costs of commercial mortgages is making commercial property investments extremely desirable at this time and so commercial property has once again increased in demand, with its value set to rise.In spite of the good news that the commercial property values and commercial mortgage sales are rising, it is still important to remember that interest rates are set to increase in the near future which will cause the mortgage costs to increase.
