14th November 2014

Why I chose to invest in commercial property

Having sold a stake in his successful property firm Instant Offices, Rob Hamilton, who is also co-founder of rapidly-growing cycling tour business Ride25, turned to Rougemont Estates to find a safe haven for his cash. Here, he shares his thoughts on why he opted for syndicated property investment.

Investors face two burning questions when it comes to finding a haven for their cash. Where can investors get a decent return? And, where will my investment money be safe? It’s a question I faced when I sold a stake in my Instant Offices business two years ago and, already having a solid understanding of the property market, I decided property investment would be the best option.

As a business leader I’m used to taking risks, but I wanted a low-risk option that would provide a safety net for my family but would also deliver decent returns. I know the UK commercial property market can return decent yields but was wary about investing in London where the steep rises are often followed by big dips.

As anyone involved in property in the south will know, the London office market can often prove volatile so I turned to Rougemont Estates to draw on their knowledge of the intricacies of the entire UK commercial property market.

As a specialist commercial property investment company, Rougemont buys high value properties around the UK regions which have secure, sustainable long term commercial tenancies in prime affluent cities and town centres and syndicates the investment to high net worth individuals, with a minimum investment of £25,000. Commonly properties have major national and international corporations or financial institutions on 20 year plus tenancies.

Rougemont typically targets key locations such as Leeds, Sheffield, Manchester, Bristol or York and properties include the HBOS northern regional office in Sheffield and an English Heritage Grade II listed office in York.

It was this expert knowledge and thorough research that attracted my interest. As James Craven has said in this blog, Rougemont works hard to find the “pockets of value” around the UK and also makes sure any investment has great future potential.

These “pockets of value” are attractive properties in their own right, and have the added value of existing good quality long term tenancies, but they also have alternative use prospects in a worst-case scenario.

You can get a better long term return outside of London, but the challenge for someone like me is how to find and buy these properties when you don’t know about locations and what is a good buy.

I think regional investments at the moment are relatively safe with a guaranteed, decent yield. The Rougemont properties yielded 7 per cent per annum, had no debt so your risk is very low and we can sit tight for the long term, selling when it’s right for the market. I like the fact that you aren’t putting money into a fund but can actually pick and choose which assets you invest in. You feel more in control.

My investment philosophy is to be as diverse as possible – not just between equities, funds and properties, but also geographically and by types of property. So far I’ve invested in three properties and I’m still looking for other similar opportunities with Rougemont.

Provided you can invest in properties long term – at least five or ten years – then you can ride out any dips in capital values and minimise your risk. After the recent turmoil in the property and financial sector investors quite rightly are demanding a high degree of security. Rougemont are not afraid of scrutiny.

All of this adds up to a solid investment prospect for me and that’s why I’ve opted for syndicated property investment. If you’ve got any further thoughts or questions about this sort of investment, please share them in the comments below.