I was looking at a property investment article in the Financial times regarding Commercial property, shop units, serviced offices and the like. It was dated 1995 and the headline reads – “Commercial property is RED HOT!”
They were dead right – I know because I burnt my fingers on the commercial property market. But the article went on to say that those that didn’t get in straight away were going to lose out. Buy, buy, buy; the headlines screamed. Set up trust funds for your children now.
Let us fast forward to this time last year – March 2010. Again the financial Times, again an article on commercial property. ‘We have hit rock bottom. Now is the time to buy.’ And then another bullish rant about buy, buy, buy. From here we can only go up. The commercial market is 10% under subscribed and serviced office rent is the lowest ever. This is the turning point that we have all been waiting for.
Last weeks Financial Times, “Commercial Property prices set to tumble.” Who are these people? The Michael Fish of property predictions? How can reputable papers like the Times get it so wrong, so consistently? Why did they think that Commercial Property prices were going to rise? Who was going to buy/rent these offices, factories and shops? Government stats now state that approximately 13% of all commercial property is sitting empty. A good investment? I think not.
But then we have to ask ourselves; will it continue to drop. The trends certainly point towards stagnation rather than a dramatic swing either way. So, if I had to pass any sort of recommendation I reckon it would be; rent in the short term. Stand back and take a close look at what’s happening out there before you get tied into a slowly shrinking market. I can almost guarantee that property is not going to miraculously start doubling overnight so we all have enough time to be cautious over our next steps.
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