Viewpoint: A Christmas Carol – is the recent flurry of transactional activity a small festive gift or a sign of things yet to come?

Industrial | Office | Portfolios | Residential & Student | Retail & Leisure | Andy Williams | 4 December 2019

At the end of what has been an unusual year on the commercial property landscape, we are seeing a flurry of transactional activity as we head into the festive period.

Bucking the trend of the rest of 2019, which is acknowledged to have been down on volumes compared to 2018, the last two months of this year has seen an increasing number our clients being able to seize the right opportunities with sensible pricing from off market deals.

The Ghost of Christmas Past

The unpredictability of Brexit, compounded by pricing levels which often bear no resemblance to the usual valuation norms, and no alternative of where to reinvest, have all combined to put investors off making significant changes to their portfolios.

Instead, investors have been keeping hold of their income producing assets. And in early 2019 we saw an increase in refinancing to shore up the more secure, better yielding stock to ride out the thickening fog of uncertainty.

The value-add transaction scene of the not-so-distant past, has been increasingly difficult to achieve necessitating ever greater scrutiny on levels of CapEx as part of the technical due diligence process.

Mr Scrooge might say it’s all been a bit Bah! Humbug!

The Ghost of Christmas Present

However, there has been a burst of activity with requirement for both vendor and acquisition surveys, with willing sellers and buyers agreeing pricing at more realistic norms.

We’ve been involved with transactions across industrial, office, care homes, nurseries, PRS, and even some retail as different investment types are being seen as offering greater value. And our input and reporting format enables our clients to extract value other bidders can’t see, being the difference between our clients winning or losing the bid.

With buyers on the lookout for safe investments, investment funds are taking the opportunity to offload property which doesn’t align with their portfolio or fit into their current business model.

The Ghost of Christmas Yet to Come

So clearly the question is will it continue or is it just a blip?

Realistically, I believe, we’ve many more months of waiting. We are not going to wake on Christmas morning with a changed market, and an awaiting feast.

Brexit will need to play out and the next Government’s policies will need to take effect, before there is any form of normality on the horizon. Until that happens, investors will continue to prioritise security and long-term investment over value-add whilst it is so hard to find realistic pricing levels.

However, what we have seen is that many of our clients are quick to react to opportunities and with our experience and renowned tight turnaround times, we’ll be right there ready to support their evolving requirements, in what, I strongly hope, will be an election result which clears the mist … a little.

Merry Christmas one and all.

Andy Williams

Andy Williams

+44 (0) 7811 367 765 andywilliams@powellwilliams.co.uk

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