London-based Nilesh Patel gives us the inside scoop into the world of off-market commercial property investment, from the team that transacted over 100 deals in 2017 for private investors worth ca. £150M.
“Looking ahead, we don’t expect 2018 to be as plain sailing as 2017,” says Nilesh. “Many macroeconomic factors may come to bite this year so whilst the need to invest remains strong, investors will become increasingly picky and quality will be key.”
When it comes to buying on the private (as opposed to auction) market, it’s essential that you know what you want and how much that would cost. When we offer deals to our investors privately (usually on an off-market basis), the quoted price will be competitive but rarely a steal – remember sellers are just as clued up as buyers!
We deal with three main categories of investor – those seeking wealth preservation, those after long-term income, and finally value-add investors. Decide which category you fit into and look at what similar properties have sold for in auction recently. Then if you get sight of an investment which ticks the boxes and is not ridiculously priced, go for it.
We have been talking with a private East Asian investor for over a year, who only wants sub £500k retail units in Zone 1 Central London. A tough ask clearly but in late 2017 we were approached by the selling agent of a café near Angel underground station in Islington let to an independent for 12 years for £22,000 pa. The agent, aware of our expertise in the sub £500k investment market, approached us ahead of going to market, and it did not take long for us to place it with our client for ca. £425k / 5.0% yield – he was decisive and got himself the deal.
Recently we also got talking to a residential developer based in Watford who wanted to make his first commercial investment owing to the punitive changes to residential taxes. He wanted something simple, financeable and local. Most of the deals we showed him locally were at sky-high prices but when a new-build Co-op Food on a 10-year lease in Croxley Green came across our desks, we got in touch straight away. There was no photo or trading Co-op to inspect at the time we got a sniff of it, but with our advice he didn’t let it go and can be happy with a solid buy at ca. £1.2m / 5.75% yield.
To get in touch for an informal chat about the market and current deals Prideview Group is working on, contact Nilesh at [email protected] or 0203 113 2142
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