No one can predict the future. I do not have a crystal ball. You can read all the diagrams, graphs, and articles you want but no one really knows. We’re figuring it out as we go especially with Covid 19 That said, I’m going to give you my perspective after being in the business for twenty five years in property.
Perhaps the biggest losers are going to be those with cash, sitting on the sidelines and doing nothing when the dust settles. I have spoken to so many potential buyers of our properties, some have bought and have not. In the interim I have kept, rents have come in without headaches and prices have gone up. When I started in Salford terraced houses were 60-70k. Today they are more like 110-120k.
The bottom line is that the UK is an Island and even before this mess with Covid 19 there was a housing shortage. More so people have to live even in the worst economic situations. So, if that’s you, you’re going to look back years later and see that you missed perhaps the best buying opportunity since the great recession. No one can time the market however if you take a long term view, property prices only go in one direction and that is UP!!!
Here’s what I see:
Office Building Investors: Office appears to be suffering the most because most have not only been working from home as a result of the distancing orders, but now, employers of all types are beginning to allow working-from-home to become a permanent option for employees. I would not touch this space, rather only buy offices in the idea of converting into flats which I have done. I am looking to buy currently as feel this market will collapse.
Stores: With stores closed (or forced to reduce their occupancy), consumers have moved to online shopping. Some businesses have gone bankrupt as a result while others are still unable to reopen due to financial constraints. As non-anchor tenants suspend rent payments, shopping center owners are sucking wind and beginning to struggle with paying their mortgage. And they don’t have the same bail out protections as homeowners or some Apartment loan borrowers so when they can’t pay their debt service, they could lose their centers. And looking into the future, it doesn’t look pretty for shopping centers. Consumers may never again fully return to physical shopping like pre-COIVD-19, when they can order online and have their groceries delivered. Bypassing the anchor destroys the value of renting space near the anchor. So as the anchor loses traffic, so goes the entire center.
The biggest winners are going to be the people who invest wisely amidst this turmoil. Certain asset types are going to shine during these dark days.
Property Investors: Everyone needs a place to live. This is what I mostly invest in and it’s what my colleaguesown the most, too. It’s for good reason. They’ve been stable through the last three recessions and we’ve always come out shining from those times. The terraced unloved houses in the NE and NW have been around more than 100 years. Recessions, wars, Great Depression these properties have endured. I am continually buying these. I am turning them into social family buy to lets and social HMOS. I like this niche and it is only growing. There are more needs due to homelessness, domestic violence and more Asylum seekers coming. Our tenants are the councils, charities and major PLCs. No voids, no managmenet and virtually no maintenance.
Warehouse and Industrial Property Investors: They are doing well right now and will continue to into the future because they are supplying what we are buying online. Who’s hiring right now? Warehouse and Industrial tenants like Amazon because the e-commerce business is booming. Amazon has a company that searches for warehouses around the country and they can’t buy them quick enough. This business is booming right now. I believe unloved NE and NW terraced houses purchased right and industrial properties are the big winners today and in the future.
What do you think?