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According to a consensus by analysts and fund managers, commercial property is looking likely to offer even greater returns in 2014. There was a 9% recorded growth throughout 2013 and this trend seems to be set to continue.

Why the growth?

The reason for the growth in value of commercial property is, like most things, to be tied to the recession. Now that the UK is finally getting back on its feet there is a much greater demand for office and retail space that previously was unneeded. There has also been a huge increase in the amount of overseas investors looking to acquire British commercial property as a form of investment.

Turning back time

At the turn of the millennium if you looked at any investor’s portfolio it was likely that commercial property accounted for a large segment of it. This was mainly due to the fact that the economy was stable and therefore, so too was commercial property – shops, businesses and industrial buildings were all in demand and provided a steady income.

After six years of recession it appears as though we can finally see light at the end of the tunnel and commercial property is once again a sound investment. During the worst of the recession, some of these property prices fell by almost half but now they seem to be building back up to what they once were.

Commercial property returns

There has been a large increase in commercial property returns due to both rent and gains in property value. Due to their success in the last financial year, many of the top fund managers have been saying that people choosing to invest in this type of property will see returns of 10% or more in 2014.

One of the most high-profile of these is George Shaw, manager of Ignis UK Property fund, who forecast that the total return will hit 11.5% for commercial property. He argues that not enough new property will be being built in order to keep up with demand, causing a rapid growth in property prices.

Marking a change

If these predictions do come true then it will make a change in the tides for Great Britain. Since the financial crisis of 2007, capital growth has been extremely low with last year only increasing by around 3%. It is important to note that not every commercial property will receive this type of increase, as Shaw stressed “there is competition for a limited number of quality assets”.

Some areas of the country have recovered better than others and therefore they will receive better returns. Surprisingly, it’s not just London that’s predicted to grow – the North West of England should yield returns of around 6%, which is great value to anyone who can’t afford London prices.

If you’re thinking about making this kind of investment then talk to a commercial mortgage broker today to help you get the best financial deals. A broker can help to save you thousands off the cost of a mortgage giving you greater ROI on your investment, find out how we can help you today!