Growing numbers of retirement savers with self-invested personal pensions (SIPPs) are building up their pension pots by putting money into commercial property.
Specialist SiPP firm Dentons reckons that more than a third of SIPPs are opened for commercial property investment – the highest level recorded.
The firm reveals that at the start of 2013, 41% of SIPPS held commercial property, which is an increase from the 19% seen last year.
The main reason for the increase is business owners are buying their own trading premises.
Martin Tilley, a director at the firm, said there were obvious tax advantages to do this for business owners but, he said, investing in property creates a tangible way for the investor to connect with their pension.
He said that many people taking out SIPPs have expressed they were disappointed with normal pensions for which they receive an annual statement and have little appreciation of where their money is being invested.
Mr Tilly said: “Property can be seen and touched, rental receipts can be seen monthly in the SIPP bank account and the client sees the asset and growth, this helps the client engage and take a more interested, active role in their pensions.”
Buying your own business premises to form part of your pension is probably a good move; suggest figures for the UK property market from specialist consultants CBRE.
The firm says that property returns for UK property picked up slightly in the past 12 months with offices in Central London showing a positive, albeit slower, capital value growth of 0.1% in February.
Across the country, that’s a slight increase year on year of 0.3% though for February growth remained unchanged at -0.2%.
Commercial property values are increasing slightly to reflect the wider growing economy and the CBRE index shows that offices have seen an upturn in performance with the strongest performances in London’s West End and for retail warehouses.