The Olympics are finally upon us and the race for commercial property is also in full swing. This coupled with the Diamond Jubilee earlier this year, has set a position for London on the world’s stage with the acquisition of commercial property being at the forefront.
Commercial Property Boom
Not only East End of London but the rest of London is set to increase in financial growth and affluence with the acquisition of commercial property. According to Toby Courtauld, the Chief Executive of Great Portland (owner of £2bn of property in Central London):
‘While we can expect further turbulence in the UK and Eurozone economies, conditions in London’s property markets remain favourable’.
This rings true as we have seen over £1.6bn worth of private investments being snapped up in the areas surrounding the Olympic Park with more developments on the rise such as:
- · Westfield Stratford City Shopping Centre: these Australian developers are also planning office and residential developments on the adjacent site.
- · Lend Lease & London Continental Railways: a development consisting of 4 metre square feet of offices and 350 homes
- Inter Ikea group: the goal of Ikea’s property division is to create 1,200 homes and up to 500,000 square feet of commercial space at a 26 acre site just 500 metres south of the Olympic Park.
Meanwhile Delancey and Qatari Diar have paid £557m to take control of the Olympic Village after the Games. Clearly, this will provide an abundance of wealth/space, with future potential for commercial property investments.
Will the boom remain even after the Olympics?
Some people believe the real legacy of the commercial property boom will start after the Olympics. Particularly, Yolande Barnes, Head of Savills residential research who predicts that the areas such as East London will attract newcomers who previously did not considered the area as a commercial property hotspot.
According to economists there have been no material changes to the outlook for the UK economy since the recession. In spite of an expected double dip the commercial property forecast has not been altered as yields are expected to increase.
The adrenaline for this boom is due to the enhanced income yield available which will generate profit from rental income or capital gain for prospective investors.
Profitability of the acquisition of commercial property is a key factor. So it is important to understand your client’s aims and objectives to ensure that you can identify the strengths and the weaknesses.
The Shard, now a dominant presence in the London skyline provides a fantastic opportunity to be a part of the commercial property market which is quickly being snapped up by individuals wanting financially viable investments and also looking to prosper from the Olympics being held in London, where there will be 600 events held over 50 days.
Described by its developers as a ‘virtual city’ it includes offices, a hotel owned by the Asian Luxury hotel group – Shangri La; luxury apartments and a public viewing platform.
Its 589.602 square feet of office space remain largely un-let. Perhaps just waiting to be snapped up by the right well-informed commercial property investor!
Joining the BOOM
Commercial property involves a variety of investments which essentially covers property used for businesses such as retail and leisure or office purposes. When it comes to purchasing commercial property, you will enter into a legally binding contract with the seller. The contract will include rights and obligations for both of you which will enable you to ascertain your position from the get go. It also involves investigating title, which ensures that the property can be passed on to the prospective buyer free from encumbrances that could affect your enjoyment of the land. This could be anything from restrictions on the use of the property or right of way which may be for the benefit of another and could hinder you from carrying out your proposed investment. However, with thorough investigations and competent solicitors a successful transaction should materialise.
But don’t forget to safeguard your investments; seeking independent advice from an insurance broker will assist you and make you aware of safeguarding facilities available to you. Particularly brokers who offer a valuation service to obtain a realistic policy.
Be part of the BOOM
Whether you are purchasing, selling or leasing commercial property or land, either as an owner, occupier, investor or developer, you must ensure that you obtain correct advice.
At Saracens, we will ensure that we understand our client’s objectives in order to tailor our advice to their needs.
If you are thinking of investing in commercial property or would like further information and advice on doing so please contact Saracens Solicitors on 0207 725 7115.
By Kesena Omakobia
photo credit: Jim Mead