Directly investing in commercial property is becoming a simpler, faster and more accessible prospect for private investors in the UK thanks to the rise of Proptech (property technology) in the sector.
Investments in UK commercial property currently have a market value of around £486 billion. Despite this, UK-based private investors occupy just 7% of the market. As the commercial property market has delivered a total return of 8.9% annually to investors over the last 20 years, there is much to be gained for investors to jump on board.
New Proptech platform
Property Partner is an example of a disruptive Proptech platform that aims to change the way investing in property works. The company says it’s the world’s first property stock exchange, and originally allowed anyone to invest in residential property in just a few steps.
The site has recently added a new service. Investors will be able to directly buy shares in commercial properties using the Property Partner platform. This means that non-institutional (ie. private) investors will be able to buy and sell shares in a number of commercial properties. Hand-picked by the site, the properties are listed in an accessible way, and can be invested in at the click of a mouse.
Innovative investment opportunity
While traditional funds can be opaque and don’t always allow withdrawals, the site offers investors the opportunity to target sub-sectors and individual assets. They can also list their shares for sale whenever they want.
It’s possible for investors using the online platform to secure monthly returns from rent and increase the capital of their properties. By listing high-quality commercial properties that have household names on long term leases, there are great opportunities for investors.
Technology changing residential and commercial markets
The idea of Proptech initiatives like Property Partner is to give easier access to both residential and commercial markets. Aiming to make investment safer, easier and on a professional level, it’s a marked sea-change in the way property investment has traditionally been carried out.
Commercial property offers the chance of a stable, long-term yield, with an income stream that will increase as the economy expands. Relatively safe against inflation, it’s an untapped market for many private investors, who have gathered residential portfolios but haven’t made the step into commercial yet.
Historically, the commercial property market has generally only been accessible through open-ended property funds or through listed property companies which are at the mercy of the stock market. These online platforms are transforming the way people invest by getting rid of this lack of transparency.
Targeting higher yields
As commercial property offers reliable yields over a long-term period of time, it is an attractive sector in which to invest particularly in the current low interest rate environment.
The platform targets higher average yields than investors get from the major funds. As well as this, investors have much more freedom in selecting investments and can sell at their own pace.
Varied investment opportunities
Investors are primarily interested in solid, long-term investments, whether in the commercial, student housing or residential sphere. The strategy of these kinds of Proptech platforms is to provide varied investment opportunities across different sectors.
The shift into online commercial investment is an interesting development, and something that we’re likely to see more of in the future.