Commercial Property DESTROYED? This Is A HUGE Opportunity!
The UK property market is massively divided right now. While the lockdowns have led to commercial properties being left empty, the residential market continues to boom. At the same time that we are seeing residential properties selling for prices higher than have been seen for many years, we are also seeing people pulling their cash out of commercial property funds.
From uncertainty comes opportunity. From opportunity comes wealth for those that take action. In this article, I will take a deeper dive in to the state of both markets and identify the massive possibilities emerging for you as a property investor.
Crash of Property Funds!
This week, Aviva closed their commercial property fund that had been frozen for 15 months. It is anticipated that investors could be waiting up to 2 years to be able to cash out their currency!
Other funds are struggling as well. According to The Times, “…£295 million has been taken out of the £540 million Aberdeen UK Property fund; the £315 BMO UK Property fund has had £178 million outflows; and the £661 million Threadneedle UK Property fund has lost £373 million.”
Habits have changed due to the pandemic. It is likely that these new habits will remain even as restrictions are lifted. Employees are realising how convenient working from home is. Employers are seeing the cost savings in not having a physical office. Consumers are finding that having goods delivered to their home is a preferable way to shop compared to traipsing around a packed city centre on a Saturday afternoon. Retailers are seeing how much more profitable it is to sell direct to consumer. These are not temporary alterations and this will leave a lot of empty commercial real estate.
Residential Property Boom!
On the other hand, the residential market is booming. RightMove data shows residential property rising at its fastest rate in five years. Zoopla predicts a boom of 46% this year. In Wales, homes are being sold without a viewing and some properties are selling within hours of hitting the market.
People are ready for a change and are becoming increasingly location independent because they are now able to work from home. This means more people than ever are looking to buy a new home.
Furthermore, during the lockdowns many people have been saving their money because they haven’t been able to go out socially or on holiday. As Mike Scott, at online estate agent Yopa, told Reuters, strength in the property market is likely to continue with “…tens of billions of ‘accidental savings' made during the pandemic” soon to flood the market.
Adding to this is the fact that the stamp duty holiday that was intended to end in March has been extended. The first £500,000 of a purchase will be exempt until June, the first £250,000 until September. With this additional incentive it is likely that many areas will continue to see huge booms in prices. The Opportunity!
All this means there is a huge opportunity for you. That opportunity is commercial to residential conversions. Reforms in planning law mean that this can be done more easily than ever. Permitted development rights mean that you can often convert commercial property into residential without the need for full planning permission.
More good news for developers is on the horizon too, in the form of the Planning Bill. The Planning Bill will establish “growth” areas in which outline planning permission will be automatically granted for projects that meet planning requirements.
As commercial real estate becomes cheaper due to lack of demand, those with the skill and know-how are able to buy these properties and push up the value by converting them to residential. This means, if you are ready, turning shops and offices into houses and flats is a goldmine!
