The economic turmoil faced in China – termed ‘Black Monday’ by the media – should serve as a reminder to investors of the fundamental strength of the UK commercial property sector and the benefits of long-term asset-backed income flows.
Despite £3.3bn being wiped off quoted UK property stocks last Monday experts claim the UK property market remained strong.
It is due to this resilience that predictions have been made of a surge in interest from Chinese investors who are seeking a safe-haven during market volatility. The Chinese have always liked things that are ‘safe’ and ‘British’. In 2014 Chinese investors accounted for more inward investment than all European buyers collectively. Notably, 10 Upper Bank Street was sold to the insurer China Life for £795 million and Tower Place was sold to Ping An, another Chinese insurer, for £300 million.
Whilst this is good for the UK economy; it is not good for domestic investors. Intense competition will naturally push prices up make it even harder to command the returns currently being generated.
Property investors need to ride this storm, and the many others expected to occur due to the state of global finances, by focusing on maximising returns from their current portfolio. A good place to start is the enhancement of asset value through effective energy management. Reducing energy can lower operating expenses, guard against future price spikes, and reduce CO2 emissions whilst helping to comply with increasing legislative requirements. Numerous studies have proven that improving lighting, air conditioning, boilers and office equipment are nearly always cost-effective for private investors, and so is reviewing the performance of existing building systems to make sure they are performing at optimum levels. Plus ultimately it is good practice to adopt Responsible Property Investment principles.
Creating a sustainable building that is optimised to run at peak efficiency whilst future proofing it against increasing legislative pressures not only increases asset value, but also makes it more attractive to occupiers particularly those with corporate environmental programmes.
As Joanne Merry, Technical Director at energy consultancy Carbon2018 Limited pointed out:
“We recently advised a Local Authority not to sign a lease on an old office block due to new Minimum Energy Efficiency Standards coming into effect in April 2018. The Local Authority was looking to lease the building for 10 years (which would be music to any investors ears) and then sub-let it to small start-up companies; effectively becoming landlords themselves. However the EPC rating for the building was a grade F and The Energy Efficiency (Private Rented Property) Regulations 2015 legislation dictate that in 2.5 years it needs to be an E or above in order to be able to renew existing leases or grant a new lease for tenants. Had they signed the agreement it would have been a complete disaster; they would have been tied into paying for a property that was unlettable.”
The UK is teetering on the edge of an economic slowdown with China being its sixth biggest trading partner and the political unrest within Russia and the Middle East. The general consensus by leading property figures is that the UK commercial market will not be slowing down any time soon. Regardless of whether it does or does not, property investors must always seek effective mechanisms to make their current assets work harder.
For further information or comment, please contact:
Lisa Turner
Marketing Manager
01252 87 87 22
lisa.turner@carbon2018.com
About Carbon2018 Limited
Carbon2018 has been providing energy solutions to the UK real estate sector for over 24 years. It takes great pride in its joined-up approach which is tailored to meet each client’s individual energy management, sustainability, and water service requirements. Its comprehensive range of technical experience means that all energy and sustainability related issues can be assessed for their impact on key stakeholders and the building’s ability to function. It focuses on demonstrating value by seeking to understand its client’s business goals then working in partnership to help achieve them. Carbon2018 believes that the key to any company’s success is its people and it is passionate about energy and the environment. To find out more, please visit its website: www.carbon2018.com
