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Manager warns about prime residential property

FT Adviser
Manager warns about prime residential property - United Kingdom - commercial property

Value for commercial property lies in the secondary markets and investors should take advantage of the “mis-pricing” of much A grade secondary stock, Longcross Property Investment fund has said.

Michael Hardman, fund asset manager of Longcross Property Investment fund, said: “We believe that the value for commercial property lies in the secondary markets, where anything which is not prime gets placed into the secondary category, meaning there is a huge scope of property on offer.

“Essentially, all non-prime is viewed as secondary, but some are considered more secondary than others.”

The firm considers prime property to cost £1,000 to £1,500 per sq ft and super prime would cost north of £2,000 to £2,500 per sq ft, such as One Hyde Park.

He pointed out although it was “hard” to get funding for residential property, “very strong tenant demand creates exceptional yields against depressed prices”.

Mr Hardman also said there was little value in “very prime” central London commercial property, claiming yields were “unlikely” to compress further so there is no increase in value to be seen.

He said: “Rents are not increasing strongly and more supply is coming to the market, so we cannot see any value increase through that route either.”


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