Why invest in property?
- UK Property is currently attractively priced, compared to the other main asset classes.
- Income yields remain at very healthy levels in a low interest rate environment.
- Changes to planning laws mean that a large amount of empty and obsolete commercial space has been, or is earmarked to be, converted to residential use.
- There is increasing evidence of shortages of suitable modern commercial space in many core locations across the UK.
- A number of indicators point to increasing competition for space, as well as rising rental levels.
Active asset management
Unlike most mainstream asset classes, property offers opportunities to add investor value through active asset management. There are a number of ways in which an experienced and skilled manager can enhance income and thereby add value to a property including:
- Change of use.
- Tenant negotiations.
Potential tax advantages
Property investment and development in the UK can also provide a number of tax benefits, by taking advantage of tax reliefs and allowances such as:
- Business Premises Renovation Allowance
- Business Property Relief
- Capital Allowances
Property affords investors access to more predictable investment returns from asset backed opportunities and may therefore be suitable as part of a diversified portfolio.
The rental income from property typically provides an effective hedge against inflation. Commercial property leases typically provide for upward-only rent reviews, with rental uplifts increasingly in line with the Retail Prices Index, therefore offering a degree of inflation protection.