According to real estate investment trust Hammerson plc, UK property can still be a safe bet ? even in today?s economic climate ? although some of the goalposts have moved. Investing in real estate was viewed as a no-risk option for those without experience and as a risk only to the bank by others.
However, what commercial property is worth comes down to how much land is available and how much tenants want the property, according to a report from the Daily Mail.
Due to the lack of available land in the United Kingdom?s city centres, land will see a return on investment in the long term, maintaining an income for the investor. Hammerson has reported that over 95 per cent of the shopping centre space it owns is occupied and the company even opened two developments in September 2008.
The problems at the moment are lack of lending. As the article from Hammersons points out: ?If none of us can borrow, none of us can buy and if no one is buying, no one is selling. Add uncertainty and you have a recipe for a downward spiral in values.?
One solution is to ask shareholders to invest more in order to raise more equity capital. Hammerson maintained that by doing this, they managed to raise almost ?600 million in new capital.
With hindsight, the company said it believes it should have recognised the risks involved with cheap credit, and the mistake of accepting a ?soft landing?. For the next five years it predicts that development will restart and this movement will regenerate the value of city centres.