STOP PRESS - 16 Jul 2009
Almost every discussion I have about the UK economy inevitably turns to property, not least because nearly everyone owns one or more properties – which makes us all experts! The consensus seems to be that the residential market is now bumping along the bottom. The commercial market is less homogenous, but freehold properties with good quality tenants and 10 years or more on the lease are proving to be quite attractive. Of course, property has to be viewed as a 4-5 year investment but has the advantage of a bricks and mortar asset base.
We are seeing initial rental yields of over 8% on good quality commercial property, which is well above the long-term real rate of return. Provided the residual lease periods is not too short, any reduction in yield will normally result in an increase in the capital value, giving a potential total return on investment of around 12-15% pa over a 4-5 year period. We will be posting more detail on this subject on our spotlight on our website shortly.
We have 2 or 3 deals of this type in the offing and will be circulating these to you in a property stop press during the next week. So look out for it, and don’t hesitate to discuss the opportunities and any questions you may have about investing in this market.
We feel this may be of interest to all our investors but if you really do not wish to see it, just let me know.
Michael Weaver, Beer & Partners Limited
