Clicks And Mortar Option For Property Investors

Lisa Smith, BA (Hons), CeFA

Big brand retailers are tumbling like dominos in the British high street.

The latest to fail is the UK arm of baby goods and clothing supplier Mothercare, with administrators closing 79 stores with the loss of 2,500 jobs.

The closures follow the recent loss of Thomas Cook, even though many of the travel agents 500 stores have been snapped up by a rival firm.

The problems faced on the high street are not reflected in online shopping and consumers favouring to shop online from home are changing the face of investing in retail brands.

The winners of the bricks v clicks war to win the hearts and souls of shoppers are the big box retailers like Amazon – and this creates an opportunity for investors.

Virtual firms need more space

Online retailers need more warehouse space than their competitors with shops – up to three times more room for storing, picking and processing orders.

This has created a new commercial property sector as internet sales boom.

Online retailers are setting up their operations near transport hubs alongside major roads and motorways.

The firms tend to install sophisticated technology for managing stock, orders and logistics.

Riding on the back of this growth is Real Estate Investment trust (REIT) SEGRO, now the largest REIT in the UK with a market cap of £9 billion.

The bonus for investors worried about horror stories of property funds suspending cash withdrawals is REITS are listed on major stock exchanges with shares rather than underlying assets changing hands.

REITS offer secure income

“When investing in the sector, it is REITs that can offer the best access to the robust and growing investment opportunity. REITs are managed by sector specialists who are experts in selecting the best assets to provide long-term, dependable cash flows,” said  Matthew Norris, head of real estate securities at infrastructure investor Gravis

“This specialism among managers in the REIT space is particularly beneficial when it comes to investment in a fast-growing but niche sub-sectors such as big box logistics and self-storage.

“Being aware of major trends such as urbanisation and the decline of UK retail is important when looking for REITs with the most promising potential for returns, as well as avoiding potential risks.

“With a broad universe that is growing far beyond the traditional retail and office space, REITs specialising in the logistics sector can offer investors a secure income where the contractual nature of assets means less volatility of dividends, as well as daily liquidity that may sometimes be restricted by funds which own property directly.”

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