Serviced offices market recovers
2017 has ushered in a recovery in the serviced offices sector,
following the initial uncertainty in the wake of the Brexit vote.
Given the weakness of sterling, international investors in
particular have been attracted to the sector, as businesses
turn to more flexible workplace solutions.
Young, agile start-up tech companies, for example, are
reluctant to commit to medium to long-term leases, as a result
of their sometimes precarious financial positions. They have
therefore found that the serviced office space is appealing in
the shorter-term.
Positive fundamentals expected to remain in European commercial property
According to a report from Fidelity International, commercial
property values across mainland Europe have been increasing
over the past few years, especially in Germany. This trend is
anticipated to continue into 2017 as attractive exchange rates
versus the euro look set to encourage cross-regional investors
to Europe from North America, Asia and the Middle-East.
European Central Bank's quantitative easing programmes
continue to encourage a transfer of capital from the periphery
to the core Eurozone. Neil Cable, Fidelity International's Head
of European real estate comments: "Real estate fundamentals
are expected to remain positive, and while QE is in place, we believe
the weight of capital will extend the European, excluding the UK,
investment cycle. We expect capital growth from yield compression
in core Eurozone to continue, albeit at a slower pace, with prime
yields likely to fall to a new accepted threshold of around 3%."
Buy-to-let investors may switch allegiance
George Osborne's tax blitz on buy-to-let landlords may have the
affect of discouraging future investment and may encourage
more high-end investors to switch their investment horizons away
from residential property and lean more towards commercial
property and the yields on offer.
The introduction of the stamp duty surcharge and other post-
Brexit vote tax changes for buy-to-let property has been a nail in
the coffin for £3m plus residential property.
Mark Fielden, property tax partner at Kingston Smith was
reported to comment: "Top-end London residentials have fallen
through the floor. If a potential investor has the right expertise or
advice, commercial property with good tenants might be a profitable
place for 2017 property investment."
Added to this potential exodus of investors, any non-domiciled
residential property owners based outside the UK will be liable
for an inheritance tax charge from April, when they own UK
residential property through non-UK companies or trusts.
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