Industrial Property Faces Drop in Capital Value - Time to Sell?
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The industrial property market is in an interesting place, on the cusp between modest growth and continued stagnation. The long hope for recovery has stuttered into life, but the expected strong export-led expansion has failed to materialise, despite sterling remaining weak. Given the gathering dark clouds on the economic horizon, many are asking whether now is a time to divest, and look towards the value of industrial property on their books.
Industrial commercial property has a pretty diverse range of property types and a variety of purposes to which it is put. Storage and distribution warehouses serve the just-in-time manufacturing and retail segments of the market, small units house light manufacturing businesses, with larger premises geared towards engineering and heavy industrial activities.
As with other sectors of the commercial property scene, industrial property has visited some pretty interesting places over the last 3 years. The economic crash sparked by the credit crisis was marked by the way it hit the services sector particularly harshly, but manufacturing was not spared. Given the tight coupling between GDP and industrial rents, unsurprisingly the value of industrial real estate rents declined significantly over that period (down 6.4% according to the latest IPD Survey for Q2 2010).
Capital values for industrial property have also been hit hard, falling 29% from 2008, to 2009. The question uppermost in industrial property owner's minds is where is the market heading now? The Commercial Property Analyst Q1 2010, from Capital Economics, sees industrial property capital growth of 9.2% balanced against continued rental falls of 3.4% in 2010, whereas the IPF UK Consensus Forecast Survey is more bearish on capital values in general, stating that:
"The dip in capital values next year is now predicted to be worse than previously expected. The quarterly survey shows that all sectors, except West End offices, have seen downward revisions to capital value growth forecasts."
The big uncertainty hanging over the industrial property market is the prospect of a second phase to the recession- the so called 'double dip'. This seems to have been bought nearer by the recent financial market turbulence over the Euro crisis, and the tight fiscal tightening measures undertaken by the UK government to control its deficit. Add to that the forthcoming tax rises, and an imminent reduction in bank lending, courtesy of the tightening of bank regulations, and it is no wonder many see GDP growth stagnating, or even turning negative again in the next period.
If this does materialize, it can only push industrial property rental income, and possibly capital values back down again. So now is a good time to assess your industrial property values, with a mind to selling. SellMyCommercialProperty are in the market for property of all types in the UK, and would be more than willing to value your property.
We have a nationwide, dedicated team of valuation professionals to call upon- and can make an initial assessment within 48 hours. If you like the price SellMyCommercialProperty give you, we can turn that into a sale quickly. We have access to substantial lines of finance, and so can move fast to purchase your industrial property. So if you see market uncertainty as a worry, going forward, call SellMyCommercialProperty today, and let us show you the true worth of your investment.
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