The economies of Great Britain and the US are intertwined beyond doubt. When one sees a crisis, the other usually follows and this is a situation currently being seen in the field of commercial property investment.
After growing credit issues in the US there are fears that investors in US businesses who fear their investments are a little risky will try to sell before the Easter weekend. Top investment bank, Goldman Sachs, has warned that the ever increasing rises in food prices will put the squeeze on supermarket profits and giants such as Tesco even face financial difficulties.
Investors have been urged to sell Tesco shares - an unprecedented recommendation. This was after shares in Tesco dropped by three percent on Friday along with Morrison's and Sainsbury's.
This could be a good thing for those with spare cash looking to invest in commercial property but keep a close eye on the market before putting your money anywhere.
As far as commercial property investment goes in the US, there has been a steep decline. The cost of living is soaring, consumers are spending less and business's are disappearing leaving vacant commercial property on most streets. This is affecting offices as well as the retail and hospitality sectors.
A show of solidarity was seen after the events of 9/11 when investment was seen as a good thing in commercial property in the US but this has not been sustained. But it's not all doom and gloom. Commercial property rental prices have remained steady and the local economies are picking up where there are population booms.
It is hoped that the current situation in commercial property investment is just a blip, inflated by scare mongers, and the recession will soon see a turnaround.
In fact, some commercial property construction companies are still seeing rising profits beyond their wildest dreams.
One in particular being a company called JV. They have just struck a deal worth $900 million for an office block in Moscow covering 101,000 square meters. The offices have been sold to a German commercial property investor and comes with parking spaces for over 1,000 cars. Ideal, considering it has been constructed beside a rail link.
JV have also had a stroke of luck in the form of an agreed $116 million loan to finance the construction of the last phase of a multi-family residential development in California. The total cost of the project is said to hit $163 million and anyone looking for an overseas property on a buy to let basis could do worse than invest in one of these.
The US markets are also mourning the death of one of their biggest movers and shakers last week. Roger Rechler was responsible for the development, ownership and operations of Long Island's largest commercial property portfolio of over 6 million square feet of commercial space.
His family business were active in the building of industrial parks and commercial property as well as converting dis-used warehouses into office space that most businesses would be proud to be part of. His vision was seen as one that wanted to build a whole community not just a few offices that he could sell on for profit.
Although this is a sad loss for the US community, it seems the general feeling in America is not to panic. This downturn in the economy has been seen before and they are confident that it will be resolved, with the much needed knock on effect on the British economy.
Author Resource:-
Investment expert Catherine Harvey looks at the role of commercial property in investments.
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