Invest in commercial property – British landlords are back in business

Much of the UK commercial property sector was hit hard by the pandemic. Property prices are now snapping back, but there’s still compelling value in retail, says David J Stevenson

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The UK’s commercial property market has long been a magnet for both institutional and private investors, including overseas buyers who valued Britain’s stability and strong property rights. Then along came Covid-19 and widespread fears about whether the property world would ever be the same again.

Vast chunks of Britain’s workforce were suddenly working from home. With few employees in the office, lots of very expensive buildings were largely empty. Employers were forking out for desk space they didn’t want any more. Shopping became a mainly online exercise as most stores were forced to close. This was devastating for swathes of retail tenants who were unable to pay their rent bills, which in turn meant that landlords were clobbered by soaring defaults and found their own finances under pressure. Manufacturing tried to persevere as normal, and warehouses and logistics were needed more than ever to cope with the growth of online orders. But pessimists argued that demand for many forms of bricks and mortar would never recover. Many real estate investment trusts (Reits) plummeted as a result. Office and retail landlords Land Securities and British Land – typically seen as bellwethers because of their national reach – fell by around 50%.

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Contributor

David J. Stevenson has a long history of investment analysis, becoming a UK fund manager for Oppenheimer UK back in 1983.

Switching his focus across the English Channel in 1986, he managed European funds over many years for Hill Samuel, Cigna UK and Lloyds Bank subsidiary IAI International.

Sandwiched within those roles was a three-year spell as Head of Research at stockbroker BNP Securities.

David became Associate Editor of MoneyWeek in 2008. In 2012, he took over the reins at The Fleet Street Letter, the UK’s longest-running investment bulletin. And in 2015 he became Investment Director of the Strategic Intelligence UK newsletter.

Eschewing retirement prospects, he once again contributes regularly to MoneyWeek.

Having lived through several stock market booms and busts, David is always alert for financial markets’ capacity to spring ‘surprises’.

Investment style-wise, he prefers value stocks to growth companies and is a confirmed contrarian thinker.