The effects of Brexit were felt in the commercial property industry immediately after the results of the referendum. Prices of shares in the properties fell sharply as investors expected a large number of tenants to leave the UK. Property funds were also affected, with investors scrambling to withdraw funds from the ailing sector, forcing some funds to either adjust prices or stop trading altogether.
The industry that was hardest hit by Brexit was probably commercial property, causing an extraordinary financial crisis that many had not seen coming. As insiders, we anticipated a slump in the industry, but not to the extent that was witnessed last year. Many property funds resorted to selling off some of their prime properties in order to meet the demand of withdrawals from investors within the UK. The Investment Association recorded a total of £3 billion funds withdrawn within the first three months of the referendum result.
Fortunately, the New Year began with better news of an increase in people that want to invest in commercial property. Many investors that had previously indicated their desire to get their cash from funds are now reconsidering the move as positive change is seen in the industry. We believe the number will increase as 2017 progresses, with many investors keeping their eye on the CBRE Monthly index and IPD that began showing a rebound in October last year. These signs of a turnaround in the commercial property sector have brought a sense of stability that many investors needed to keep holding on to their properties. In addition, investors that shunned property buying in 2016, both in commercial and residential are gradually coming back and infusing life once again into the sector.
Another positive outcome of increased popularity of commercial properties to investors in the UK is the reopening of property funds. Many had suspended trading to cushion themselves against massive withdrawals, but with the stabilization of the sector by end of 2016, many are open and inviting new investors to invest with them. We believe that some established property funds such as Aviva, will be offering a full service to investors this year even after closing shop last year. Even so, some funds are still in recovery but with a projection a stable income, it is our opinion that the period of uncertainty in the commercial property sector is over.
For investors that are looking to invest in commercial property, we believe that this is the best time to do so. Buyers are booming when it comes to real estate resulting in property funds offering incentives to those that want to buy property in the near future. It does not matter whether you are venturing into the market or had been an investor but panicked after Brexit, the time to get back in is now. If you are looking for an income that is stable and reliable, your answer lies in commercial property investment.
In our opinion, the rise in investment for commercial properties will continue to rise and most likely surpass its previous position. We only need the policies set in place after the exit to favor the industry as before and we will see many view property as a worthy investment. The continuous growth in the sector will be great for those in the bridging loan industry as well.
This article was written by Matthew Dailly, Managing Director of specialist bridging loan company Tiger Bridging.
About Tiger Bridging:
Tiger Bridging is a specialist bridging finance provider with over a decade in the market. They provide short term property funding solutions across the whole of the UK, offering bespoke and flexible lending terms.
Their funding is free from the restrictions imposed by larger institutions or the mainstream lenders. Their small stable of valued and fast-moving investors, complemented by a select group of hedge funds, provides a steady and reliable flow of capital to clients. Their culture is bespoke and their attitude is proactive. If the deal makes sense, they can get the funding, regardless of the credit status of the client.
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Company Name: Tiger Bridging Ltd
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City: London
Country: United Kingdom
Website: www.tigerbridging.co.uk
