How does a recession affect property investment?

How does a recession affect property investment?
How does a recession
affect property investment?

How does a recession affect property investment

As the UK economy officially enters a recession, the impact on the property market raises questions and opportunities for investors. We take a look at how investors can leverage the market’s nuances to secure profitable investments with long-term returns.

The latest recession
“The UK economy has officially entered recession, figures show,” reports Sky News. This downturn presents both challenges and unique opportunities for property investors.

The current recession echoes historical trends, but not all recessions are created equal. While economic downturns typically lead to financial challenges for individuals and businesses, they also present unique opportunities for proactive property investors and REITs. Understanding the dynamics of the market is crucial for maximising returns and minimising risks.

One of the primary impacts of a recession in the UK, is the fluctuation in property prices on the housing market. Unica Capital believe that a recession is not necessarily all doom and gloom. Pettyson Estate agents agree, “Entering a recession isn’t automatically bad for everybody.” The last major recession, commonly referred to as the Great Recession of 2008-09, saw varying effects across different sectors and locations. Similarly, the 2020 recession, driven by the unprecedented nature of the COVID-19 pandemic, brought its own set of challenges and opportunities. For investors adopting a long-term view of the market, the most pivotal part of any recession is the rate of recovery.

Opportunities for investors
Gladfish, highlights the potential for investors to capitalise on the market’s nuances. “Global economic recessions can bring about significant challenges, but they also present unique opportunities for property investors in the UK,” notes the article. In particular, London has performed far better than any major cities in the US and Europe since the end of the COVID-19 pandemic. And is in a far better position to recover from a UK and wider global recession. By diversifying portfolios and focusing on high-demand areas, and real estate investments with refurbishment or growth opportunities, investors can mitigate risks and capitalise on the market’s potential.

One significant opportunity during a recession is the ability to purchase properties at lower than market value. As economic downturns lead to financial challenges for individuals and businesses, distressed properties often become available for sale at discounted prices. While a downturn can hurt the short-term performance of commercial real estate, it is essential to remember that the market will eventually recover. For investors with liquid capital (such as Unica Capital), this presents a unique advantage to acquire high-quality assets at a lower cost, potentially unlocking significant value in the long term.

Despite the challenges posed by economic downturns, the UK property market has historically shown resilience and the ability to recover. The private rented sector (PRS) tends to be counter cyclical to the sales market. Even during times of uncertainty, rental demand remains robust, providing a stable income stream for investors.

A Long Term Approach
Unica Capital’s commitment to identifying, financing, and managing unmatched real estate investment opportunities positions investors to capitalise on the market’s nuances. With a portfolio comprising prime office real estate across London and international properties, such as long term rental properties in the Alps, Unica Capital offers investors access to high-performing markets with long-term growth potential.

Taking a long-term view is crucial when investing in the property market during a recession. Looking beyond short-term economic fluctuations, investors should consider strategic investment opportunities with strong potential for sustainable growth. Factors such as population growth, infrastructure development, and government policies can significantly impact the market in the coming years, influencing the performance of real estate investment properties.

Despite the challenges posed by global recessions, historical trends have shown that the UK and European property markets, in particular London, often recover after a downturn, making it an attractive option for long-term investment.

What’s next?

As investors navigate through economic uncertainties, maintaining focus, diversifying portfolios, and leveraging investment fundamentals are key. By partnering with reputable real estate investment trusts like Unica Capital, investors can seize opportunities and invest in resilient property portfolios even during recessions.

Published: February 22 2024
Author: Byron Baciocchi

How does a recession affect property investment

London Prime Office Market Predictions for 2024

Prime Office Investments, An Industry Overview.
Prime Office Investments, 
An Industry Overview.

Unica Capital expands property investment portfolio in Victoria London

The prime office market in 2024 is shaping up for a dynamic year, marked by resilience and growth. As the industry anticipates a positive trajectory, we explore the key trends and factors influencing this sector.

UK’s Prime Office Allure
The United Kingdom maintains its status as the prime strategic investment destination for commercial office spaces, underpinned by the resilience shown since the pandemic. London, in particular, has maintained its position as a magnet for those looking for long-term investment security through sustained prime rental growth. The city’s enduring appeal has consistently drawn property investors from across the globe. Recent data from CBRE’s 2024 European Investor Intentions Survey reinforces this notion, revealing that London is the most attractive city in Europe for investors for the second consecutive year with almost 10% growth compared to Amsterdam (2nd) with 7% and Berlin (3rd) with 6%.

Despite facing ongoing inflationary pressures and global economic fluctuations, London’s resilience has kept investor sentiment strong. The city’s unique combination of economic stability, cultural significance, and robust market potential has consistently supported a positive outlook.

Rising Investor Confidence
REITs that invest in prime offices are increasingly optimistic about the market’s prospects. One significant factor contributing to the buoyancy of the prime office market is the Bank of England’s decision to keep the base rate unchanged. For investors with ample liquidity, this presents a golden opportunity to capitalise on favourable market conditions, making it an exciting time for Unica Capital and other forward-looking property investors.

A view strongly held by Byron Baciocchi, Chairman and Chief Executive of Unica Capital, who stated in a November 2023 Property Week interview, “our own business is on the acquisition trail as we seek to build our portfolio and generate stable returns, looking for both turnkey opportunities but also those where refurbishment and repositioning work can help unlock value.”

The West End drives London’s Prime Office Rental growth
One noteworthy trend in the prime office market is the resurgence of office rentals. London, in particular, has witnessed a remarkable recovery, with prime office rentals surpassing pre-pandemic levels by 3.8%. The West End leads this resurgence, boasting an average rental growth rate of 8.8%. Other areas like Westminster and Victoria are also witnessing substantial growth. Additionally, Soho and Mayfair are experiencing the benefits of their strategic locations, offering connectivity and a wide range of amenities. This is exemplified by recent acquisitions such as Great Smith Street, Wardour Street and Poland Street.

Embracing the Return to Prime Offices
The return to prime office spaces is gaining momentum as businesses emphasise the importance of employees returning to the workplace. Major corporations, including EY, Citigroup, Lloyds Banking Group, and HSBC UK, have introduced policies to encourage office attendance. This shift is indicative of a broader trend toward reoccupying prime office spaces in attractive locations away from the traditional hubs of Canary Wharf to more connected locations like Soho and Mayfair.

Unica Capital’s prime office properties are well-prepared to accommodate a diverse mix of tenants. Some tenants are downsizing as they embrace hybrid working, while larger firms are moving from older headquarters to modern buildings with stronger environmental credentials.

Seizing Opportunities
The prime office market in 2024 offers a wealth of opportunities for investors. Turnkey investments, as well as properties that require refurbishment and repositioning, can unlock significant value in this thriving market.

Investors are drawn to the UK’s prime office spaces, driven by confidence in the market’s potential. Rising rentals, the return to offices, and the evolving needs of tenants all contribute to the positive outlook for this sector. As the industry adapts to changing dynamics, the prime office market remains an attractive and promising real estate investment landscape.

Published: February 8 2024
Author: Alexandre Piechaud

Unica Capital expands property investment portfolio in Victoria London

London Prime Office Market Predictions for 2024

London’s Prime Office Market Outlook for 2024
Londons Prime Office 
Market Outlook 
for 2024

London prime office market outlook for 2024

In the ever-evolving landscape of the commercial real estate market, 2023 was marked by challenges stemming from soaring interest rates. However, 2023 proved to be a year of opportunity for those with liquidity, and with nearly 30% of 2023’s total deal flow happening in December, market sentiment has shifted to a positive outlook for 2024, for some of us at least.

The expectation that the Bank of England would start to lower interest rates in Spring may be premature, given last weeks news of higher than expected inflation. Those waiting for access to cheaper borrowing will have to hold out a little longer. With uncertainty still hanging over the sector, it will be another year of opportunity for investors with liquidity.

Expectations the Bank of England will eventually start to lower interest rates later this year may come too late for some investors. With interest rates now expect to stay higher for longer, the property sell-off will continue for a while at least. As we step into the first half of 2024, the property investment trends set in motion in 2022 and 2023 are expected to continue. Unherd points out, “Keep the lights on until 2025 and wait for the cavalry of easier money and a resurgent economy to appear on the horizon. Until then, amid low occupancy and cash burn from high-interest rates, wait for rates to come down and for people to return to the office and shopping centres.” This situation paradoxically opens up more opportunities for those of us holding cash reserves.

The continued availability of discounted London office deals, as reported by Bloomberg, reflects the pain borrowers and lenders face, but also signifies a golden opportunity for those with liquidity looking to invest in prime office spaces in 2024. With the supply and demand imbalance continuing to be a driving force behind rental growth, as highlighted by CBRE’s Real Estate Market Outlook for 2024, there will be plenty of desirable properties at reduced asking prices continuing to come onto the market. 

This situation is exemplified by the amount of Middle Eastern and Asian investors who have come to the London market during 2023 “Middle Eastern investment into central London offices is the busiest it has been since before the pandemic,” notes research from BNP Paribas Real Estate. This trend has been further reinforced by the words of James Carrington, head of City investment at BNP Paribas Real Estate, who mentioned that “central London commercial investments have become more attractive in recent months to overseas buyers.

With interest rates now expect to stay higher for longer, London is set for an influx of foreign investment, so a word of warning to those dipping their toe into the market. They should not underestimate the importance of knowing and understand the finer nuances of the London real estate market. Contacts and partnerships that have been cultivated over many years put Unica Capital in an enviable position, with the ability to react quickly and secure off-market deals.

Despite the many challenges, London’s economy is adapting post-COVID, with a renewed focus on quality, sustainability and accessibility. Properties like Poland Street, Cork Street, and Great Smith Street which are delivering high quality prime office space in sought after locations are exemplars of this trend.

The return to the office appears to be well underway, as an ever increasing numbers of businesses demand their workforce return to the office at least 2 or 3 days a week. U.S. headquartered companies adopting a return-to-office policy in the UK are leading the way. This ties in with news that office leasing activity in London was at it’s highest level since 2018 – Activity was 93% higher in the second half of 2023 compared to the first half.

News of the cancelled HS2 2nd phase has already affected the market in Manchester and Birmingham. In contrast, London consistently presents itself as a secure option for strategic investment. A prime example of this is news London already outpacing both these cities (and the rest of the UK) on services exports. Between 2016 and 2021, London’s services exports have grown by 47% to reach £152.2bn. Exports from the UK’s second- and fourth-largest services-exporting cities – Manchester and Birmingham – did also grow, but at much slower rates of 11% and 3% respectively. London will increase it’s share of the market if cities like Manchester and Birmingham do not take drastic action.

With demand for well-connected, high-quality prime office spaces in mixed-use locations within London remaining strong for the foreseeable future, and with construction delays and a current shortage of prime stock, it is predicted there will be a shortfall of 13 million square feet of office space in the City of London by 2040, as reported by The Straits Times. This demand highlight the real potential of growth for those with a long-term investment strategy.

Unica Capital predicts that those who have liquidity and the ability to act fast in this market will thrive in 2024. Energy-efficient upgrades attract tenants, location, and quality are paramount, and the ability to adapt and seize opportunities is crucial. While the outlook for 2024 is cautiously optimistic, those with liquidity, and the ability to act swiftly when opportunities arise are looking forward to a busy and productive year. With market sentiment improving, but the expected decrease in interest rates on hold for now, a host of landlords will be looking to offload further assets. Staying vigilant, seizing opportunities as they arise and priming ourselves to capitalise on emerging market trends as they happen will be the key to success in 2024 and beyond.

Published: January 25 2024
Author: Byron Baciocchi

London prime office market outlook for 2024

Unica Capital acquires 167-169 Wardour Street in Soho

Unica Capital acquires 167-169 Wardour St in Soho, London
Unica Capital acquires 
167169 Wardour St 
in Soho, London

Office in Wardour Street Soho London

Specialist real estate and property investment company Unica Capital has kicked off 2024 on strong footing, announcing the acquisition of 167-169 Wardour Street in Soho for £11.5m.

Wardour Street, Soho:
A freehold commercial building, totalling 13,628 sq ft arranged over six floors, is fully let with a restaurant occupying the basement and ground floors, with office space on the remaining four floors.

The restaurant space is occupied by modern Indian dining experience Tamarind Kitchen, while office tenants include sports management agency CAA Base Limited, documentary company Rogan Productions Ltd and London Power Networks Plc.

A lease has recently been renewed with the main office tenant, CCA Base Limited.

The property is located on one of Soho’s most popular streets, close to Mayfair and linking Leicester Square to Oxford Street.

With a portfolio of combined assets with a value of £380M, the acquisition forms part of Unica Capital’s core strategy to build an exceptional portfolio of stable, income-generating residential and commercial assets located in the capital’s best postcodes. Other properties include 2-4 Cork Street, 55/56 Poland Street and 35 Great Smith Street which was acquired in the middle of 2023.

Byron Baciocchi, Founder and CEO at Unica Capital, said:
“This acquisition epitomises our approach to sourcing the best buildings in prime locations with long term appeal.

London is currently an attractive buyer’s market for those who can act quickly and decisively on the right opportunities. Despite previous broader economic uncertainty, the combination of stagnant or falling prices and growing tenant demand make prime London property an enticing prospect for investors including family offices and ultra-high net worth individuals.

Following a strong and successful 2023, the acquisition of 167-169 Wardour Street marks the beginning of what will be a substantial growth year in 2024, with nine active acquisition projects underway in central London.”

Tydus Real Estate Ltd, Maurice Turnor Gardner LLP and Ashfords LLP acted for Unica Capital on the acquisition.

Published: January 11 2024
Author: Ricardo Gato

Office in Wardour Street Soho London

The Prime Office Market in 2023: A Year in Review

The Prime Office Market in 2023: A Year in Review
The Prime Office 
Market in 2023: 
A Year in Review

2023 began on a challenging note, with economic uncertainties and rising interest rates casting shadows over the real estate horizon. Yet for investors and REITs with cash, it has been a year of strategic investment opportunity when those without liquidity divested portfolios. Looking at the market as a whole, as we approach the close of the year, there are signs of improvement, offering a glimpse of a market gradually returning to pre-pandemic normalcy in 2024.

The Tough Year:

In 2023, the prime office market was shaped by the complex dynamics of the global economic landscape, which, in turn, were influenced significantly by inflationary pressures.

As the global economy grappled with inflationary forces, central banks have pivoted to a hawkish stance, departing from the accommodative monetary policies of the early stages of recovery. ABRDN’s UK economic outlook, Q4 2023, highlighted that “The hawkish stance adopted by central banks is a strategic response to rising inflation. By tightening monetary policy and raising interest rates, central banks aim to mitigate inflationary pressures and curtail the risks associated with unchecked borrowing and spending.” This departure from the earlier approach reflects a nuanced understanding of the economic landscape, where preemptive measures are deemed essential to maintain stability and counter potential inflationary challenges.

The relentless rise in interest rates has been a defining feature of 2023, posing challenges for investors and developers who rely on funding through borrowing from banks.. This challenging financing landscape has hugely impacted the prime office market. These Developers found it more difficult to secure favourable financing terms, and investors faced heightened uncertainty regarding the returns on their investments. The increased cost of borrowing not only constrained the ability to initiate new projects but also placed existing projects under scrutiny, with financial feasibility and profitability becoming more intricate considerations for those who rely on external financing.

A Year of Opportunity for Unica Capital:

Knight Frank’s London November residential review notes, “Last month’s pause by the Bank of England added to a sense that we have gone through the eye of the storm.” This is backed up by a 14% increase in the number of exchanges in the prime London sales market in Q3 2023 compared with a 5 year average. This temporary reprieve, marked by the halt in interest rate hikes, provides a moment of respite. While the lending landscape remains formidable, individuals and entities with significant liquidity, such as Unica Capital, find themselves in an unparalleled position. As the report states, “Great time for those with liquidity (i.e., Unica Capital) – Can use position to negotiate.” This underscores the pivotal role of liquidity as a potent negotiating tool, enabling strategic players to capitalise on their financial robustness within a market ripe with opportunities.

Office Market Dynamics:

The prime office market is showing signs of recovery, with office occupancy gradually returning to a semblance of normalcy. The industry is at a crossroads, defining its new normal post-pandemic. Demand for central London properties has proven resilient, outpacing the US and Europe, making it an attractive hub for REITs investment.

Continued demand for Central london:

Amidst the challenges and uncertainties of 2023, one notable trend stood out in the prime office market – the demand for central London properties. Positively, the demand in the heart of the UK’s capital remained notably higher than in the United States and Europe. Despite the global economic shifts in investment patterns, central London retained its allure for investors, positioning itself as a resilient and attractive market.

The sustained demand for central London properties can be attributed to several factors. Firstly, the city’s historical significance, cultural richness, and robust infrastructure continue to make it a prime location for businesses and investors. The city’s diverse talent pool, coupled with its status as a global financial hub, has contributed to its enduring attractiveness in the face of broader economic uncertainties.

Throughout 2023 central London has proven to be a stable investment choice for REITs, drawing property investments that contribute to its ongoing prominence in the global real estate landscape. The Central London office rental market, especially in Q3, has exhibited encouraging signs, with data from Cushman & Wakefield reporting a 41% uptick in leasing activity compared to Q2.

In contrast to the fluctuations experienced in the United States and Europe, central London’s sustained demand underscores its status as a haven for property investors navigating the complexities of the current economic climate.

Grade A Driving the Market:

Navigating the complex terrain of the 2023 real estate market, Grade A properties have emerged as the driving force, with rental returns reaching unprecedented heights—a testament to the enduring demand for these premium spaces. In Q3 Grade A spaces have accounted for 70% of the total volume of office leasing. Industry expert Tom Bill, Head of UK Residential Research at Knight Frank comments, “Grade A properties signify the pinnacle of quality and functionality. In times of uncertainty, businesses and investors gravitate towards spaces that offer both prestige and modern amenities.” This underscores the steadfast appeal of Grade A properties, even in the face of broader market challenges.

According to insights from the ABRDN UK real estate outlook Q4 2023, “Investors recognize the intrinsic value of Grade A spaces, viewing them as a safe harbour amidst economic uncertainties. The premium rates signify not just cost but the assurance of long-term value and stability.” This perspective reinforces the strategic choice that Grade A properties represent, best-in-class assets – buildings with low carbon footprints, appealing amenities, alluring locations that attract high occupancy.

Within this competitive landscape, Unica Capital emerges as a key player uniquely positioned to master the intricacies of the Grade A market with the ability to discern opportunities that align with our long-term vision. Unica Capital, has a proactive approach to identifying and acquiring prime Grade A assets, showcasing a commitment to high quality prime office spaces that have enduring value.

Distressed Assets and Off-Market Opportunities:

The current climate presents a unique window for savvy investors to explore distressed assets and off-market deals. In 2023 Unica Capital, has been well-placed to capitalise on these opportunities. Recent acquisitions, such as Poland Street (which recently completed a full refurbishment and welcomes new tenants) and Westminster (currently tenanted by the Secretary of State for Housing, Communities and Local Government), exemplify the company’s ability to identify and secure assets in line with its commitment to excellence.

Long-Term Investment Perspective:

In the face of uncertainties, the focus on long-term strategic investment remains a guiding principle. Purchasing distressed assets and securing off-market deals aligns with a strategy that prioritises stability and growth over time. Unica Capital’s approach underscores the belief that these investments provide a secure pathway in the current market landscape.

As we review the prime office market landscape of 2023, it is evident that challenges coexist with opportunities. Unica Capital, stands in a strong position, strategically positioned to harness the evolving dynamics. In a market seeking stability, the company’s liquidity, strategic foresight, and commitment to long-term investment make it a formidable player and well placed to capitalise in the prime real estate market during 2024 and beyond.

Published: December 8 2023
Author: Alexandre Piechaud

London’s Surge in Leasing and Investments Signal a Return to Normalcy in 2024

London’s Surge in Leasing and Investments Signal a Return to Normalcy in 2024
Londons Surge in 
Leasing and Investments 
Signal a Return to 
Normalcy in 2024

London's Surge in Leasing and Investments Signal a Return to Normalcy in 2024

In a notable shift toward normalcy, London’s prime commercial property market is demonstrating robust signs of recovery and resilience. The Central London office rental market, especially in Q3, has exhibited encouraging signs, with data from Cushman & Wakefield reporting a 41% uptick in leasing activity compared to Q2. Notably, Grade A spaces have spearheaded this resurgence, contributing to 71% of the total activity. The overall performance in Q3 surpassed the five-year quarterly average by 14%, highlighting a trajectory toward a post-Covid ‘normal.’

This data reports substantial increase in the volume of office space under offer, marking a 22% surge above the five-year quarterly average. Cushman & Wakefield’s data suggests that this trend is poised to continue, with an estimated 60% of the under-offer space anticipated to close by year-end, projecting an annual take-up of around 8.5 million sq ft, aligning with the figures from 2021.

London’s City, in particular, has emerged as a powerhouse, claiming 64% of overall take-up in Q3, amounting to 1.64 million sq ft. This strong performance underscores the city’s resilience and attractiveness to occupiers, defying the broader challenges faced by the commercial property market.

Confidence in London’s market is further exemplified by British Land’s strategic decision to take back an 8 story building near Regents Park once Meta broke its lease. This is despite Meta offering an alternative tenant to take the building, British Land opted to reclaim the space, citing a significant rise in office rents since the original agreement in 2021. British Land has said it expects that rents will grow at the top end of its previously guided range in 2024 across its portfolio. This move underscores the landlord’s confidence in securing higher rents amid the evolving market dynamics.

Moreover, the influx of Asian capital into London’s prime commercial property market serves as a testament to the city’s enduring appeal. High-quality office buildings with strong sustainability credentials have become focal points for Asian investors, reflecting a flight to quality. Despite the challenging macroeconomic environment, London’s resilience and efficient repricing in the property market are attracting strategic investments from Asia.

The ongoing surge in London office development, with a record 5.1 million sq ft of new construction starts, further substantiates the city’s rebound. Deloitte’s London Office Crane Survey reveals a robust development pipeline, including an extraordinary surge in refurbishment starts. With 34 schemes covering 3.3 million sq ft, refurbishments are being propelled by the anticipated tightening of Minimum Energy Efficiency Standard (MEES) regulations, aligning with tenants’ sustainability commitments. This surge in refurbishment activity is indicative of developers’ confidence in meeting environmental standards and fulfilling the growing demand for premium, sustainable office spaces in the capital.

London’s commercial property investment market is on a trajectory to reclaim a sense of normalcy, fueled by a resurgence in leasing activity, strategic decisions by major landlords, an influx of Asian capital, and a robust development pipeline. The signs of recovery are bolstered by confidence in premium office spaces and the city’s enduring attractiveness to global investors.

Published: November 23 2023
Author: Byron Baciocchi

London's Surge in Leasing and Investments Signal a Return to Normalcy in 2024

Exploring Property Investment Risks Beyond Central London

Exploring Property Investment Risks Beyond Central London
Exploring Property 
Investment Risks 
Beyond Central London

Exploring Property Investment Risks Beyond Central London

In the realm of real estate investment, location remains a critical factor. The UK’s commercial property market offers a range of real estate investment opportunities, from London to less central areas. Whilst the wider UK market looks attractive, it is essential for investors to exercise caution when considering regions beyond central London due to risk factors involved.

Outside London:
A recent transaction involving the sale of the Co-operative Group’s Manchester headquarters exemplifies the inherent unpredictability of real estate markets outside the capital. Originally appraised at approximately £210 million, the property was eventually sold for approximately £140 million, indicating a substantial loss for the seller. This case, while seemingly isolated, underlines the broader challenges investors may encounter when speculating in regions that may lack the resilience and stability of London.

Market sentiment, prevailing economic conditions, and the actions of other investors are factors that can significantly influence property values. In the Manchester situation, the reduced sale price reflected various market dynamics and shifts in demand.

The challenges faced by regions like Manchester underscore the strength of London’s real estate market. In Manchester, the initial property price predictions were contingent on the anticipated reduction in travel time to London and Birmingham facilitated by HS2. However, the recent cancellation of the HS2 line has prompted the readjustment in the market and cancellation of hotel and office builds. This scenario stands in stark contrast to London, where established hubs like Soho, Mayfair, Fitzrovia, and Belgravia continue to thrive, unaffected by the uncertainties that have impacted regional markets. The cancellation of HS2 is indicative of the nuanced risks associated with investments beyond London, emphasising the stability and resilience inherent in the capital’s property market.

The London real estate market:
In contrast, London consistently presents itself as a secure option for strategic investment. According to BNP Paribas Real Estate, prime office rents in London’s West End are anticipated to reach an exceptional £300 per square foot by December 2024. Demand for office space in London consistently outstrips supply, with rents exceeding £150 per square foot in prime locations.

Simon Knights, head of West End agency at BNP Paribas Real Estate, highlights the positive trajectory of the London real estate investment market, with rents regularly surpassing £200 per square foot. He explains that the key drivers of this growth are leasing events, business expansion strategies, and the demand for top-tier talent, all of which underscore London’s resilience as a thriving business.

The London property market benefits from a limited development pipeline, which helps maintain prices and appeal. Increasing demand for high-end properties, when appropriately priced, keeps the market resilient.

In contrast to the central London property market, venturing into property investment in wider Britain poses certain risks due to the unpredictable nature of these markets and their susceptibility to external influences. Conversely, London remains a secure option, with prime office rents on a trajectory to reach unprecedented levels. For investors seeking a more stable investment environment, London continues to be a preferred choice within the ever-evolving property landscape.

Published: November 9 2023
Author: Alexandre Piechaud

Exploring Property Investment Risks Beyond Central London

Commercial Property – What the Future Holds

Commercial Property – What the Future Holds
Commercial Property
 What the Future Holds

Commercial Property What the Future Holds

The commercial property sector in London is experiencing a significant shift, with prime commercial office space in the city undergoing a transformation. In this article, we’ll explore the key trends and developments shaping the future of the commercial property market in London.

Diverse Portfolio Assets
Diversification is a critical aspect of the evolving commercial property market. REIT’s are focusing on creating portfolios with diverse assets, catering to a broad range of tenant needs. This approach allows for increased flexibility and resilience in an ever-changing market. Leases for shops and offices can often be longer and the turnover of tenants is lower, making the commercial property sector appealing at a difficult time for the housing market. UK Investor Magazine highlights the appeal of commercial space in the current economic climate identifying “…an imminent supply squeeze in certain segments of the commercial property market” this is due to the cost of development build costs and finance rates, which has lead Investment Managers to confidently predict that there is potential for strong commercial rental growth due to a lack of pipeline commercial space to meet demand.

Quality Assets Meeting Tenant Demands
Tenant demands encompass both high level fit out specifications and Environmental, Social, and Governance (ESG) credentials in the prime commercial real estate market. High-quality assets that meet these criteria are increasingly sought after. The London property market is witnessing a growing desire for office and shop spaces, aligning with businesses’ needs, especially in the wake of the shift towards hybrid working models. Tenants are increasingly favouring properties that offer a blend of functional excellence and ESG compliance.

Shift Away from Canary Wharf
The Guardian reported on a decline in Canary Wharf’s appeal as a global financial centre. The decision by HSBC to move from Canary Wharf to the City of London, with other companies like Clifford Chance following suit, underscores the post-pandemic shift in demand for office space. Hybrid working models and the perception of Canary Wharf as a “sterile” environment have contributed to this change. To revitalise the area, Canary Wharf is exploring diversification into life sciences, technology, media, and charity sectors. This shift in tenant needs has opened up more opportunities for prime office rentals in central London locations such as Soho and Mayfair.

Location Variety for Live, Work, Play
The concept of “live, work, play” is gaining prominence in the commercial property market in response to tenants’ employees work life balance needs post-pandemic. Locations like Mayfair and Soho are becoming increasingly attractive for businesses due to their versatility. These high footfall, highly prominent areas offer a variety of amenities and lifestyle options, making them appealing for both work and leisure. Being centrally located means that central London locations have excellent transport links, as well as dining, shopping and entertainment options, solidifying them as prime commercial office locations that are attractive to tenants.

Residential Property Impact
The Standard notes that London’s private lettings market volatility is driving investors toward commercial property. Longer leases, lower tenant turnover, and the growing demand for office and retail space are making commercial property investments an appealing option. The balance between residential and commercial property investments can help mitigate risks in the property market. They report that “almost a third of landlords in the capital intending to add to their portfolio are considering making the switch” with 38% of landlords looking to invest in office space.

Unica Capital’s Leading Role
Unica Capital is at the forefront of the evolving London real estate landscape, driving the surge in prime office rents and reshaping the city’s office market. Their commitment to excellence and strategic investment in historic centrally located buildings, such as the recently completed prime commercial office space on Portland Street, reflects their pivotal role in shaping the future of London’s business landscape.

The future of the commercial property sector in London holds promise and opportunity for investors and developers who embrace diversity, quality, and adapt to evolving tenant demands.

Published: October 20 2023
Author: Michala Chatel

Commercial Property What the Future Holds

Real Estate Investments in Q4 – Forecast

Real Estate Investments in Q4 – Forecast
Real Estate Investments 
in Q4  Forecast 

Unlocking Prime Real Estate Opportunities

Autumn 2023, is set to be another interesting phase for the commercial property market. Property stock remains low and rental demand for the best properties can be very high. Now is the perfect time to make strategic investments in prime real estate. With the market dynamics evolving and new opportunities emerging, Unica Capital recognises the opportunity to continue investing in this sector. Below, we explore the current landscape and reasons why investing in property, particularly in Real Estate Investment Trusts (REITs), is a smart move in Q4.

Unlocking Prime Real Estate Opportunities:
Despite economic uncertainty, a rapidly rising cost of debt, stubborn inflation, and corporate demand fluctuations, the real estate market is showing signs of resilience and growth. A closer look at the Q3 data reveals that this is the time to act swiftly and invest in high-quality prime real estate spaces. Here’s why:

  • Tenant Attraction and Retention: Prime real estate spaces play a pivotal role in attracting and retaining tenants. In a competitive market, tenants are increasingly looking for high-quality properties that enhance productivity and employee well-being.
  • High Demand for Quality Spaces: The demand for premium real estate spaces is on the rise. Investors who secure these best-in-class assets in prime locations can benefit from strong rental income and capital appreciation.
  • Meeting ESG Targets: Buildings that meet ambitious Environmental, Social, and Governance (ESG) targets are in high demand. Investing in and refershishing such properties to meet these standards not only aligns with responsible investing but also positions your property favorably.
  • Held property value: The top-end of the Prime Central London market, continues to outperform the lower end of the Prime Central London market, with prices in the latter falling by -1.7% on the year, vs -0.6%.
  • Resilient Prime Rentals: London, a global financial hub, has experienced a 2.7% annual rental increase in prime properties. This trend highlights the potential for steady income and growth in prime rental markets.

Market Sentiment:

Property Week has reported that Landsec has announced strong occupier demand for prime office space, with a 100bps increase in occupancy in its central London portfolio. Additionally, they signed £17 million of lettings at rental values exceeding estimates, underlining the appeal of high-quality spaces.

A Carter Jones report highlights that a key factor supporting the case for prime real estate acquisition is the scarcity of high-quality supply, particularly in key city centers such as the City of London. Developers face cost and supply chain challenges, and this lack of supply will continue to support prime rental levels.

The Unica Capital Portfolio has benefited from this demand and is positioned to offer high returns for long-term real estate investments, with a portfolio made up of quality rental spaces in sought after prime real estate locations.

Looking Ahead:

As we enter autumn 2023, the UK property market continues to offer promising investment opportunities. While some areas may experience price corrections, the prime and super prime markets remain robust. For overseas investors, London offers stability and attractive tax structures. As prime office rents increase, Unica Capital and investors play a pivotal role in the city’s growth and prosperity.

In a world where some are divesting portfolios, those who seize the opportunity to invest in prime real estate and REITs in Q4 are likely to reap strong rental returns and capital appreciation. The real estate market is evolving, and smart investors should take action now to position themselves for long-term success.

Published: October 5 2023
Author: Byron Baciocchi

Unlocking Prime Real Estate Opportunities

Now is the Time to Capitalise on London’s Buyers’ Market

Now is the Time to Capitalise on London’s Buyers’ Market
Now is the Time to Capitalise 
on Londons Buyers Market

Now is the time to capitalise on London’s buyers’ market

London is now experiencing a buyers’ market, and this coming year will yield excellent opportunities for investors with high levels of liquidity like Unica Capital.

BNP Paribas’s latest research has shown a repricing that has seen the commercial market drop by just over 17% since summer 2022, yet these prices – for assets most in demand by tenants – are now looking to have bottomed out ahead of almost every European capital, with lucrative rises now on the horizon for the London market.

A rare opportunity for UHNWIs
With the European Central Bank acting slower than the UK to raise interest rates (and likely slower to reduce them), and the feeling that these rates have now peaked in the UK, London is at a crucial point for investors looking to increase their holdings and be ahead of the curve.

It is a rare moment after 10 years of sellers holding the cards, and the next year is set to offer a unique opportunity, especially for all-equity buyers, to secure prime investments at a significantly reduced value – but acting now before rates do fall is key.

Significantly, one cohort is poised to reap the rewards without their need for expensive financing, and their ability to act quickly and flexibly – gaining a significant advantage over institutional investors. Ocorian found that 72% of family offices are looking to increase their property holdings with 30% looking to do this dramatically. In London Knight Frank recently reported that private investors with liquidity had been behind 44% of central London office investments in the last year (when the historic average is 36 %). In numbers, it represents £1.3 billion in transactions funded by family offices and UHNWIs – numbers that demonstrate increased confidence that London’s commercial property sector is ahead of other European capital cities at turning the pricing corner.

Maximising returns
Unica Capital has a track record of negotiating exceptional deal value and maximising ROI. All-equity acquisitions mean being a step ahead, securing deals on the most coveted properties that have all the assets needed to realise the highest returns, including a “green premium” for those that meet high sustainability ratings from the likes of BREEAM and LEED.

Interestingly of the recent increase in investment by those with cash to buy, £690 million went on assets that needed capital expenditure to bring them up to date with desired sustainability standards. Unica Capital knows this type of investment well and has demonstrated success by investing in capital improvements to reveal the true worth of properties – future-proofing them and elevating them to the standards being demanded.

Published: September 29 2023
Author: Byron Baciocchi

Now is the time to capitalise on London’s buyers’ market

Get in Touch

This field is for validation purposes and should be left unchanged.

Get in Touch