Island Life Magazine Ltd October/November 2015 | Page 124

PROPERTY

Opportunity

knocks

for commercial property

This year’s big changes to the pension rules have
presented many over-55s with an unexpected
opportunity - to unlock their retirement savings pot,
and spend or invest it as they choose.

F

and Pyle Street in Newport, have become
or some, that may mean splashing
particularly popular with investors. The
out on a luxury car or boat, whilst
rent returns might be lower than those
others will play safer and squirrel
from prime high street units, but then
their savings away in the bank.
the cost of investing is lower, too. And
But for those looking to create an
ongoing income, investing in commercial there’s usually no shortage of potential
tenants with good, locally-based
property is becoming an increasingly
businesses to draw from.
appealing option, according to Gavin
Chambers of Newport-based
agency Gully Howard.
That may come as something
of a surprise, with traditional
High Streets visibly struggling
against competition from the
Internet and out-of-town retail
outlets.
“There’s no doubt that the
past seven years have been
quite tough and we’ve seen
some pretty big brands
disappear from the high
17 Cross Street
street” says Gavin, “but on
the Island we are seeing
people investing quite
successfully in more secure
“We always advise our clients that
local investments. Good solid businesses
there’s no right or wrong way to invest
such as hairdressers, for instance – one
– it’s very much a case of horses for
example of which is yielding just under
courses,” says Gavin. “What suits one
9 per cent gross return for one of our
investor will not be right for another”.
clients”.
As he points out, leasing high profile
He says that secondary commercial
premises to a large, well-established
locations such as Cross Street in Ryde,

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brand might seem a more profitable
option – but the bottom line might be a
yield of less than 6 per cent per year.
“Rent returns will obviously be higher
in the High Street, but then you have to
balance that out with the fact that you
will be paying more for the investment”.
For those who need finance, Gavin
says that banks are becoming more
amenable: “They are certainly becoming
less fussy than they were a year ago, and
some of the banks I’ve spoken to will now
lend up to 50 per cent on a commercial
investment”.
He counsels would-be investors to seek
advice from several financial brokers and
not just their own bank, and he
can recommend brokers where
necessary.
Looking round the Island
at the high number of empty
commercial properties, Gavin
says he sees the need for a
change of mindset among some
of the old-established landlords.
“We are operating in a
different commercial world, and
most successful landlords will
recognise that” he says.
“It’s far better to negotiate with a
tenant where necessary, to ensure
the premises are continuously
occupied – otherwise after three
months, a vacant property will start
costing the landlord commercial rates,
which no investor will want”.
He says that in certain circumstances,
if a tenant is in difficulty, it usually makes
more sense to release them from their
letting contract and attempt to place a