Retail and industrial assets at top of commercial property investor wish list for 2021

The majority of property investors are looking to put their money into industrial and retail assets (39% and 38% respectively) in the UK in 2021, according to a flagship commercial market survey conducted by property consultancy Allsop. The survey also found that most investors are planning to hold or improve or hold their assets in 2021, with only 9% planning to sell.

Some of the survey’s main findings are as follows:

Investment choices for 2021:

  • Mixed-use (35%) and high-street (25%) assets currently hold most appeal amongst those interested in buying retail in 2021, with shopping centre investment on the agenda for only 2% of respondents.
  • Buyers intend to invest in retail with a view to either holding the assets until economic pressure eases or converting them into alternative space (37% of investors said the changes to the Use Classes Order had impacted their buying decisions).
  • Industrial and logistics assets are firmly on the investors’ watchlists, with respondents demonstrating similar levels of interest in single and multi-let assets (52% and 48%, respectively). Aided by the increasing popularity of online shopping as a result of the pandemic, the demand for strategically positioned warehouses is unlikely to diminish any time soon.
  • Investors looking at offices expressed a strong preference (74%) for city-centre investments over out-of-town business parks (26%) despite market speculation that offices will follow residents as they move from city centres to locations further out of town.
  • The majority of investors in hospitality (50%) said they would invest in hotels, with restaurants and pubs cited as less popular choices (27% and 23%, respectively).

Factors impacting buying decisions in 2021:

  • 38% of respondents said that the extension of the eviction moratorium for rent non-payments had impacted their buying decisions, showing a cautious approach informed by the ongoing trend of delayed or withheld rent, which has affected landlords across the country.
  • Property sector investors are bullish and take a long-term approach to their investments – only 39% said that Covid-19 had impacted their property investment allocations.
  • The announcement of the Covid-19 vaccination programme was shown to have only a minor impact on property investors’ plans for the coming year – only a third said that it had had a positive impact on their buying decisions, with 66% citing no impact or a negative impact.

George Walker, Partner and Auctioneer at Allsop, said: “With online shopping shifting from being a choice to a necessity for millions, it’s hardly surprising that logistics and industrial assets are in such high demand. The appetite for retail, on the other hand, may seem counterintuitive given the difficult year retailers had in 2020 but when you look at the shift in pricing there is plenty of opportunity to make cheap capital work for the active investor.”

“After a turbulent time following the first national lockdown, the market has readjusted, and there is substantial appetite to transact despite the uncertainty surrounding the rollout of the vaccine.”