An analysis by London lettings and estate agent Benham and Reeves have found that commercial property offers far higher yields than residential, despite the latter being more popular with investors.
Across the UK commercial property investment offers average annual yields of 10.7 per cent, compared to just 3.4 per cent for residential, according to Property Reporter.
The study has revealed that the best commercial property yields are found in Scotland (20.4 per cent), the South West (13.7 per cent) and Yorkshire and the Humber (12.9 per cent), with the best residential yields being in Scotland (4.4 per cent) and the North West (4.3 per cent).
Looking at the initial cost of investing, the average residential property owner needs a lower budget of around £259,850, while a commercial investment needs a budget of 75 per cent more, with an average value of £454.384.
Marc von Grundherr, director of Benham and Reeves, said: “It’s fair to say that both the residential and commercial markets have been impacted by the pandemic and so it’s hard for investors to know where to put their money at present.”
He examined that there were many factors to consider from an initial investment level, such as which sector to choose and the ongoing requirements, capital gains potential, and the regional disparities in the UK across the sectors.
He said that while a commercial investment can offer a higher yield, the recovery timeline due to the pandemic is likely to continue for longer than that of the residential market, and residential investment remains dominant where availability, affordability, and the sector value is concerned.
“However, commercial investment can provide a more hands-off approach for those doing so through a third-party platform, while the amateur buy-to-let landlord is sure to spend more time sorting out tenant issues and so on,” he added.
Despite the gap between the returns offered for residential and commercial, the residential market is far bigger, with 541,966 listings versus just 12,022 across the commercial space.
If you’re looking for commercial estate agents in Liverpool, get in touch today.