Traditionally, investing in bricks and mortar was a sure-fire bet. Probably something to do, in part, with the security that investing your money into something tangible brings. The reality though is that property values suffer peaks and troughs, just like any other type of asset, particularly during times of economic hardship.
Many property investors will hold a broad portfolio – or residential and commercial properties – to help spread the risk. However, the COVID-19 pandemic has left a plethora of commercial properties lying vacant, with all the associated security risks such as squatting and theft. With an uncertain future for the high street and city centre offices looming, should investors seek alternative assets?
What does the future hold for commercial property?
With home-working set to continue for the foreseeable future, if not indefinitely, is commercial property still a sensible investment choice? Office space in London is reported to have declined in value by 10% in 2020, and landlords have been left with a bill of £2.15billion in unpaid rent, due to the effects of the COVID-19 pandemic.
However, other parts of the sector have seen huge growth such as data centres supporting technology companies (think: the rise and rise of Zoom and MS Teams), as well as an increase in the number of distribution centres and warehouse space being used by online delivery companies.
Removing all commercial property from an investment portfolio might be a case of ‘throwing the baby out with the bath water’. Looking at alternative ways to invest in commercial property could hold the answer.
What are the benefits of investing in commercial property?
The two primary drivers for investing in commercial property are that it potentially provides capital growth as well as income through property rental. During an economic crisis, trapped equity can be a gamble – as the old adage goes ‘a property is only worth what someone is prepared to pay for it.”
Investing in property funds may offer greater flexibility as the investment lies with the companies that own the properties as opposed to the actual buildings themselves and if you choose the right type of property fund, you can offset market instability with liquidity.
What are the alternatives to investing in commercial property?
Vacant land is not always the first thing investors think of when they are looking to diversify their portfolio. The reasons may seem obvious – it may not produce a steady income and, let’s face it, it’s not a particularly appealing or thrilling investment.
However, investors can reap the rewards by investing in vacant land.
Why should I invest in vacant land?
To start with, vacant land is a finite resource – there isn’t more of it being made; so there is greater demand for it. Compared to a long-term property investment, land is very inexpensive to own. It is also lot more ‘low maintenance’ as there are no ongoing building works or renovations required as it doesn’t wear out or depreciate like a property may do if it becomes neglected.
Ensuring vacant land is safe and secure is more straightforward compared to vacant property as there’s no need to worry about troublesome tenants, burst pipes, theft – in short, there’s very little to break, steal or destroy.
How can I protect my vacant land?
Land owners should still take precautions to ensure their unoccupied land remains safe and secure.
Physical barriers, such as fencing or concrete blocks, can help prevent anyone from driving or getting onto your land. Often these measures are a useful deterrent to would-be trespassers. Fencing enhancements such as anti-climb characteristics or razor wire may provide an additional layer of protection.
If there are any buildings on the land boarding up may be used to prevent people from entering access points such as doorways and windows. Typically made from timber, boarding up is a useful temporary measure but more heavy-duty steel screens and doors should be considered if a long-term security measure is required to prevent unlawful entry and vandalism.
CCTV is one of the best deterrents to trespassers, and it can also provide vital video evidence in case of a break-in to support criminal investigations and prosecutions. CCTV also enables you to monitor your site around the clock, and respond quickly in the event of an intrusion.
SafeSite Security Solutions provide a range of professional security products and services to protect vacant properties, which are available to buy or hire nationwide.