SIPP and SSAS provider Hornbuckle Mitchell has argued that potential investors should turn to the commercial property sector.
Many advisers tend to look at the sector in an unattractive light because it can often be seen as both transactional and short-term. However, experts at the firm have suggested that investing into property and securing it within a pension can be a great way to make a nice buck on the side.
The market has had a turbulent history recently with prices falling dramatically since the global crisis hit in 2007. Capital values further fell by a mammoth 32.5 per cent from 2007’s peak. However, experts predict that the market is set to turn around for investors in 2013, signposting to average yields of up to 6.5 per cent.
A group of individuals that will benefit greatly from the sector are advisers because clients will need support, information and advice when they initially make the transaction and then afterwards when dealing with development, incoming rent and services that will require costs.
Lisa Webster, senior technical consultant at Hornbuckle Mitchell, said to the Financial Reporter: “Some advisers fail to take into account the longer term value of property, seeing funds simply tied up in bricks and mortar. Many are led to believe there’s little longer-term income potential as property is an illiquid investment, often taking up a high proportion of the pension scheme’s asset.
“However, the financial adviser’s role is very important. An adviser has the job of handling the incoming rent and even if the pension has borrowed and has debt to be repaid, there will normally be surplus rent given that borrowing limits are fairly restrictive.”
As equity markets continue to fluctuate, more and more investors are shifting their gaze towards commercial property. It is recommended that financial advisers take advantage of this demand and use their experienced knowledge within the field.