Until recently, investing in the London commercial property market would have seemed a poor proposition. The recession caused a collapse in this market, which at its worst saw values falling by 33% from their 2007 high point.
However, there has since been a rebound in property prices, and recent signs of economic growth will further augment that recovery. The right property in London can provide both significant rental income and the potential for long-term capital gains.
For that to happen, however, you have to choose a suitable building in the right area.
Choose the right area for your investment
The most important single decision you will make when choosing an investment property is the general neighbourhood in which you decide to centre your search. Different areas of London are most suitable for different sorts of commercial property, with retail, office and industrial zones all having their specific areas of prime desirability.
You will need to balance the risk of choosing an expensive area which is already well known for the type of property you wish to purchase, and the opposite risk of taking a chance on an up and coming neighbourhood.
Plan for the future
You will get the best return on your investment, as in all markets, if you ‘buy low’ and ‘sell high’. This means attempting to predict those areas of London which are about to become fashionable hot-spots, and buying property there before the rush begins.
The most recent example of this has been the spike in property values around Hackney, and particularly in the Shoreditch area. This was partly driven by the Olympics, and partly by the changing demographics of the borough.
Those investors who purchased office and retail space at rock-bottom prices made significant amounts of money when the boom began.
Investigate transport links
One of the drivers for neighbourhood development in London is the availability of transit links, particularly public transport. The advent of Hackney as a booming area of real estate was driven not just by the Olympics, but by the new Overground and Tube developments which took place around that project.
It would be wise both to investigate how close your potential new property is to existing Tube and train stations, and whether there are any new developments in the pipeline which may affect the area in which you are investing. For example, if you can be confident that a new link to central London will be open within a few years in your chosen area, it would be a very good idea to invest right now.
Invest in good property management
Whilst the three rules of property investment might be location, location and location, there is no point in finding the perfect neighbourhood if your property is falling down. Of course, you should make sure that the infrastructure of the building is sound before you make your purchase, but just as importantly, you should check the credentials of whoever is going to be managing the building for you.
If you can trust them to keep the property looking modern and professional, as well as ensuring that your rent is received on time from reputable tenants, you will be well on the way to a sound investment which will provide you with returns for years to come.
This article was contributed by PropertySales.com, the market-leading directory of commercial property for sale from Dynamis, the online media group also behind BusinessesForSale.com and FranchiseSales.com