Property managers are starting to shift away from expensive rates in London and looking for secondary commercial property in other regions, Fundweb reports.
According to IMA Property, net retail sales stood at £98 million in April 2013, which is a mammoth rise from the £33 million recorded the month earlier. As rates continue to rise dramatically in the capital city, many property managers are aiming to look outside of London for secondary tier property in order to save costs in a tough economic climate. These figures are further aided by separate research by the Associate of Investment Companies (AIC) and investment consultants Morningstar, which highlighted that the direct property sector in the UK had traded on a 5.68 premium in April.
According to Fundweb, Kames Capital chief investment officer Stephen Jones said: “There is a move away from the very expensive safe haven assets of central London and there is beginning to be some value in sensibly stock picked and assessed second tier, second city properties around the UK.”
Investments manager of the SLI Property Income Trust Jason Baggaley also added how secondary sites were increasing in demand, especially considering that the yield gap between primary and secondary properties is the highest that it has ever been. As more people start getting riskier with their investments, secondary yields are hitting double digits, especially in areas such as Manchester, Edinburgh and Glasgow.
Mr Baggaley was quick to note, however, that tertiary properties are still not a worthy investment to make. With there being no quality yet in this tier, he suggested that secondary sites is as low as investors should go if they are looking to save money. It is important to fully research into your investments, as you may find that a secondary site is actually tertiary quality, so always weigh up value with quality and opportunity in the commercial sector.