Investors have always considered commercial property investment as one of the most lucrative and rewarding ways to build wealth. There are many ways to invest in property, from buy-to-let, renovating and reselling units or building a portfolio for long-term income. Each option offers different opportunities for making money in commercial property.
At John D Wood, we manage properties for clients to maximise their investment profits. Our focus is on ensuring that clients receive the highest return on their commercial property investments over time. We work diligently to help clients achieve long-term financial success through property management services. Our goal is to help clients make the most out of their investments by providing expert management services.
If you’re thinking about investing in London commercial property this year, we can help. Read on to discover what the property market looks like right now and how you can invest wisely.
The London Property Market in 2024
The news often discusses rising prices. However, the housing market is improving as we enter the second quarter of 2024. There have been substantial property deals confirmed, investment into development and planning, along with uplift in rent prices. Industry experts predict a lot of fluctuation in the first half of 2024 as prices undergo an adjustment period, but there is a lot of positivity looking towards property prices levelling and the market becoming more stable as the year progresses.
Those looking to invest in the higher end of the commercial property market without being reliant on borrowing money will find plenty of opportunities in London. London continues to be seen as one of the most desirable global locations to invest in property with a big number of overseas investors.
Overall, the London property market is on track to recover and grow towards the end of the year. In 2024, there is still the opportunity to buy property at a good price. By doing so, you can make money on your investment in the future.
Why is commercial property investment more rewarding than residential?
London remains greatly attractive to businesses as a global office destination. One of the biggest driving forces in the commercial property market in 2024 is new office openings and those relocating to different areas of the city. We are still recovering from the Covid-19 pandemic and seeing a trend of businesses investing in their offices to attract employees to hybrid-working. This means that London offices are in increasing demand and competitively priced.
By comparison, residential property prices and mortgage rates are still incredibly high. This makes buying, selling, and letting homes a much more complex procedure right now. Commercial property has much more promise with high supply and demand, plus proposed planning permissions that are due to come into play later this year. This applies to all three sectors in commercial property: industrial, offices, and retail.
Outside the current climate, there are three reasons why making commercial property investments are a good idea.
1) Higher Income. Across the board rent prices per sq ft are higher on commercial property in the UK than residential. While the initial investment may also be higher, your potential ROI will always exceed that of residential property.
2) Simpler Valuations. Commercial property is valued on potential income, yield and strength of covenant making it easy to determine the price of a property. While commercial property trends do change, every area of London is always in demand from one industry or another, so you will always have a market for your property investment.
3) Longer Leases. Longer lease terms are a huge benefit to commercial property investment. On average, London commercial leases are between 10 and 15 years compared with 6 – 12 months for residential lettings. This guarantees security for a significantly longer period.
Where are the opportunities in the London property market?
In a recent report of the commercial property market in 2023, office space demand in all major cities in the UK was significantly higher than other areas of the market. Last year, the vacancy rate of London offices fell to its lowest level since 2022, at the same time investment turnover reached £1.6 billion. In 2023, Grade A (new build) offices in London made up 71% of leased office space. This is because of the focus on more sustainable and eco-friendly office buildings in London.
2024 is a great time for commercial property investment if you can buy new buildings, renovate, or rebuild for profit. A significant demand exists for office buildings to be more efficient and sustainable. Investing in these types of properties now will bring substantial rewards in the next ten years as the industry improves.
While London office space is the current industry favourite, there are many more ways to make smart commercial property investment choices. By using a consultancy like John D Wood, you can find property investment opportunities that suit your needs in both the short and long term. Our Investment team will take the time to understand your requirements, expected return and plans for the future. From there we will diligently go to market for you and present you with opportunities as and when they arise.
When you choose to work with John D Wood, you can be at peace knowing that you are working with experts in their field. Our team have a strong knowledge of the market and can make well-informed decisions on your behalf. Discover our current Investment property requirements and properties available to buy as investments on our website now.
For more information on how we can assist you with your London property investments, get in touch with our team today on 020 7629 9050.
