The latest HMRC figures have revealed a 19% fall in commercial property transactions over £40,000 to 97,000 in 2020/21 down from 120,000 in 2019/20.
Property investor and developer Jansons Property has said that this drop in the number of property transactions suggests the value of commercial real estate is hitting its peak making it unaffordable to businesses.
Andy Jansons, managing director of Jansons Property, said: “The commercial property sector is at the top of a cycle, we are seeing a lot of rental growth and hardening of yields which in turn results in capital growth. However, for businesses this means being in limbo as the price of moving has skyrocketed.”
The number of property transactions has been slowly declining since 2018/19 and this trend has only been accelerated by COVID-19, as companies have been cautious when making big decisions about site moves and purchases.
The increase in price of commercial property can be explained in part by the reduced supply of commercial property land, as employment land is routinely sold for housing land in the South which drives demand.
Jansons added: “Business owners and investors have largely sat on their hands over the past 12 months with a ‘wait and see’ approach as the aftermath of COVID-19 unfolds. However, this stalling of decisions should begin to shift in the second half of 2021.”
“Now is the time for businesses to review their existing property space with many looking to downsize due to the change in working culture, so we could start to see transactions pick up again.”
Jansons Property explains that with the ban on commercial evictions coming to an end in June 2021, more properties will be coming onto the market which is also likely to encourage transactions.
In the latest Spring Budget, the government announced the extension to the existing ban on commercial evictions in England until June 30th to provide support to businesses unable to pay their rents.
This post has originally been featured in Property Wire.