While the Chancellor’s November budget was not exactly eye-catching, it did include one or two interesting talking points.
Take the proposed changes to commercial property taxation, for example, which are expected to have a material impact on the market as a whole. More specifically, those selling commercial property will no longer be allowed to use indexation to mitigate their capital gains tax liability in the new financial year, which in turn will make it harder for them to realise the value in their real estate.
From an investor perspective, however, does commercial property remain a viable option for the near-term? Let’s look at the key considerations:
- How do you invest in Commercial Property?
In simple terms, the commercial property market is made up primarily of shops, industrial buildings and offices.
Individual investments can be made either directly or indirectly, with the former option requiring you to buy into funds that hold physical real estate within an overarching portfolio. With an indirect investment, you stake your money in existing property companies and developers, or at least funds that include these options.
Understanding these investment vehicles is key, as you’ll need to determine their viability in the current climate and ensure that you utilise your capital as effectively as possible.
- Do you have Access to In-depth Market Information?
While you may have an understanding of the commercial property market and its mechanisms, these mean little without knowledge of the real-time market and its performance.
After all, the Brickfest brand has recently confirmed that commercial property in the UK is no longer the most appealing investment option in Europe, with both domestic and international operators thought to have been deterred by the Brexit vote. Approximately one-third of surveyed respondents considered commercial property in Germany to be far more lucrative in the longer-term, so we’re likely to see a decline in demand over time.
This type of objective, real-time data is crucial when investing in commercial real estate, as it helps to make an informed and ultimately profitable decision.
- Do you know Where to Access Actionable Investment Advice?
On a final note, it’s important to identify the industry experts that can offer you actionable and strategic investment advice.
These outlets are in touch with the real-time commercial property market in the UK, making them ideally placed to inform your investment strategy in the near and longer-term. Similarly, they can also provide ongoing advice at every stage of the real estate and investment life cycle, regardless of how you utilised your capital in the first instance.
This type of advice can be crucial, particularly in an economic climate that continues to fluctuate wildly in line with macroeconomic and geopolitical trends.
While his background is mostly related to trading stocks, he recently gained interest in real estate crowdfunding with Fundrise.