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Choose Your Retail Investment with Care

20th January 2017

January is when every publication carries its own predictions for their relevant market. The property press is no exception.

Although all of the business indicators are positive at present for the end of 2016, the future is deemed to be anywhere from slightly dark to pitch black.

The combination of a “hard” Brexit, rising inflation, a falling pound, rising oil prices and Donald Trump seem to dictate that this year will be extremely difficult.

As regards property, someone should really tell the market participants who seem to be ignoring all forms of doom-mongering and carrying on regardless.

However, there are some real risks to certain sectors.  One of those is the retail investment market, or more particularly the retail occupier market.

Most retailers have reported increased sales over the Christmas period and that of course is very welcome.  Despite this, retailers face many headwinds all of which will combine to reduce the amount of cash they have to spend on rent.  This will limit rental growth.

From an investor’s point of view, it is vital to ensure that if you are purchasing a retail investment, then it is in an area where there is competition for scarce space to enable current and future rental growth.

This is where your agent will come into his own.  You need a proper analysis of demographics, demand, available space and rental value history before committing to any retail investment.

This year, it may be worth considering one of the less glamorous sectors.  Industrial is very much in favour and well located offices are not far behind.

However, according to the Daily Mail, it makes no difference – were all doomed.

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