In the world of commercial property, the Christmas sales period is not an opportunity to go and grab a bargain on the high street, it is a mad rush at the end of the year when investors look to balance their books and spend their cash, with assets moving around quicker than Barcelona’s players pass a football.
The weak position of the pound will add an interesting twist to this already busy period. International investors are keen to take advantage of a favourable exchange rate, whilst a drop in value is making it harder for funds to reach the percentage returns they were hoping for.
With Autumn well and truly set in, smart asset managers should be looking ahead now and getting improvement works done to make sure they are maximising their asset values ahead of going to market (or indeed going off-market).
There are a number of quick-fix refurbishments that can be carried out now that will help increase the value of an asset. For example:
- With EPC regulations coming in to force in April 2018, any asset being sold now that has the relevant sustainable credentials is going to demand a premium. Upgrading light fittings, windows and entranceways can be cost-efficient ways of increasing an EPC rating.
- First impressions count and refurbishing reception areas and public spaces can go a long way to attracting and retaining occupiers, which itself appeals to would-be buyers.
Pexhurst managing director, Martin Vella, says: “The trick to refurbishing to sell is finding the balance between the cost of making improvement versus the added value of those improvements. Asset managers need to be working with their advisors to establish what work it is worth undertaking. Our project team can then look at how to value engineer the work to minimise costs.”
Autumn Statement: What we want to see from the Chancellor
On November 23 Philip Hammond is going to be delivering his first Autumn Statement, which many see as his opportunity to set out how he will be managing the economy with an eye on the impending departure from the European Union.
Property and construction are likely to figure heavily and here, Pexhurst’s managing director, Martin Vella, sets out what he hopes to see.
“There is a lot of talk about the Chancellor taking measures to invest in infrastructure and boost housebuilding and the housing market, but I think there is a lot that needs to be done to help the commercial property development and construction market too. The two key things he can address are the skills gap and foreign investment.
“Investment funds from the US, Canada, the Far East and the Middle East could be the key to keeping the construction industry buoyant. George Osborne was almost an anti-international property investment with the extra taxes he imposed. Investors are sniffing around at the moment and the more that can be done to encourage them to acquire assets the better. Many of them will be looking for quick turnarounds and to maximise their returns by making improvements, so not only would they be stimulating the acquisition market, they would be creating jobs for contractors too.
“I would also like to see measures put in place now to safeguard the future use of European labour. There is a skills gap at the moment, in fact, it could be called a skills emergency. It is one thing talking up apprenticeships, but the reality is that apprenticeship schemes are sparse, partly because the attitude from our youth is not great when you tell them they’ve got to be on site ready for a days’ work at 7:30, and that it could take them over an hour to get to the site. Take away the overseas labour and we are going to have a real problem with recruiting skilled labour, which is going to slow down site progress and likely push labour prices up due to the shortage.”