You Get What You Pay For Says Richard Sutton
20th November 2012
The bad news is that the UK commercial property sector is suffering its deepest downturn since records began, but the good news is that this is the time to get a bargain, says RICHARD SUTTON of NG Chartered Surveyors.
You get what you pay for. Yes, it’s an old saying but in property terms, it still applies now more than ever. This recession has without a doubt created some real property bargains – if you know where and how to look for them. Nevertheless just because it’s cheap it doesn’t necessarily mean it’s a good investment.
Investors can make good money on properties which are occupied by stable tenants which have committed to long-term leases. Commercial property yields in the UK are currently on the rise, due to a combination of low capital values and rising rents.
Few advisors pitch regional properties to their clients, so this is where we can benefit in the provinces. It makes sense for investors to look a bit further afield for properties where they can invest their money.
For new investors, the idea of buying and selling property may seem like a daunting task and they would rather put their money into something like bonds, which offers the advantage of liquidity. For other investors, being able to see a brick and mortar location for their investment gives them some degree of security that is not present in a paper bond.
There are still deals to be found on properties located at the fringe of prime areas. When commercial tenants cannot find space in the heart of the business district, they will be forced to look further afield. Business owners will always be in the market for good quality space, even if they have to be a bit flexible about location
What the past five years have demonstrated is that taking clear solid advice from a team you trust is vital and that why “you get what you pay for” rings true. Inevitably as bank finance becomes harder and harder to come by, property purchases involve more and more hard cash at the start and in a lot of cases this cash is your client’s pension.
One thing that I have learned over the years is not to mess with people’s pensions.
As a surveyor you are employed for a whole range of reasons, clearly your technical skills but also your market knowledge, your integrity and your honesty. It’s your advice at the start of a project that will be key in whether it proves to be a success or a failure.
Teamwork is also key, if you have any doubts, don’t be afraid to ask questions or commission further surveys whether these be structural or environmental, a little investment now saves a big bill and an even bigger headache further into the life of the project.
As your client’s surveyor, it’s important to make sure all the consultants are focussed in the same direction and roles don’t get blurred, they are there to do a job and do it well. Taking good legal advice at the start of any project is also important. We have found that the solicitors who perform best and have the most to offer are the ones who will get out of the office to visit the property or the site without hitting the button on fees, it’s this goodwill that goes down really well with clients and helps cement future relationships.
At the start of the project consider the end. What is the exit plan? If there isn’t one, you have to question why not and if the property is then the right one for your client. Money is hard to come by so invest it wisely, work hard for your client and take nothing for granted, it’s in these hard times that quality advice counts more than ever.