SA investors benefit from UK commercial property

Posted on 19 January, 2011 by MOVEHUT

The commercial property in UK is now a more feasible investment option because of the new exchange control allowance of R4m every year for the South Africans as per the Broll Investment.

It is the right time for the South African people to make investment in the direct commercial property of UK specifically because of the lowering value of sterling as compare to rand and improved access that has created new higher exchange control limits, as per Davis Adams, a Broll Investment broker.

The value of commercial value in UK dropped between 40-50% from peak to trough in the present cycle says Adams. The value then increased in the latter part of year 2009 and in the first half of year 2010. It is said that pricing has dropped and values have stabilised. The prospect of rental growth is prominent in London and other parts of United Kingdom over the coming 5 years as rents will cover the existing downturn, pointed Adams.

He also explained that Broll’s register of United Kingdom investment-grade properties usually have rental structures in surplus of 10 years, and that these rents are completely repairing and insuring (FRI).

This will enable South Africans to make passive investments. With the availability of debt in United Kingdom is usually limited to institutional grade investments with tough property fundamentals, the all-in cost of debt, based on a 5 fixed rate of interest, is available at striking levels of between 4.5% and 5%.

This states that direct commercial property can be bought for yields considerably above the price of funding.


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