The investment opportunity in commercial property is “very strong” as values dip to their lowest point in 12 years, AEW UK portfolio manager, Laura Elkin, has said.
Speaking on a webinar hosted by the Association of Investment Companies, Elkin said that according to data from the real estate and investment firm CBRE, average values on commercial property were at their lowest point since AEW’s initial public offering.
As a result, Elkin suggested there was a “significant buying opportunity” within the sector.
“We see some very strong yields on offer. We see some very attractive subsectors,” she added.
One subsector mentioned by Elkin was the leisure sector, which she described as being “very unloved” by a large number of UK property institutions.
“When we see a dynamic like that in the market, where large property houses are taking a negative view on a sector wide basis, we see that as an opportunity,” she explained.
“Where sellers are indiscriminately dropping a sector, sifting through to find the quality assets that we would like to buy.”
She added that one of the reasons she has such faith in this asset going forward is that all of the tenants within AEW’s portfolio are trading very strongly, pointing specifically to Odeon Cinema which operates at the Leicester leisure site.
Elkin also discussed the opportunities present in the industrial property sector.
“That is the sector where we see the most opportunity for rental growth within our current portfolio,” she reported.
Elkin explained that industrials is a sector that is “not to be ignored” as AEW has experienced the growth it can offer first hand.
“A couple of years ago we had about 60 per cent of our portfolio here. We have taken some of our profit off the table and we now hold around 37 per cent.
“We kept assets where we see very strong potential for rental growth.”
She stated there has been “excellent” rental growth in the past in industrials and predicted there will be “a lot more to capture in the future”.
tom.dunstan@ft.com
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