This first quarter of 2015 we have completed on eight separate freeholds. Around half of these transactions were negotiated off market. This seems to be a more common affair, as the amount of freehold stock especially in Oxfordshire and Buckinghamshire stays compressed. We have also noticed greater competition for commercial freeholds over the past few years, low interest rates and a suppressed amount of commercial development has contributed to this situation significantly.
This does shine a light on the significance of commercial property as a primary investment, in a competitive investment portfolio, returns through rental income have maintained a very competitive edge over returns from alternative asset classes. Although there has been no major gains in freehold values over the last 5 years, we have proactively added value to our capital base through favourable purchases, and refurbishments and development, a typical example of this has been the conversion of first and second floor office space in town centres to residential accommodation.
With the short to mid term horizon seeing interest rates staying low and the rate of inflation temporarily behind them, before widely being forecasted to steadily increase toward the BOE’S 2% target when low oil prices creep out of the annual equation, this is a scenario that will continue, as returns on capital stay at multi year lows, we will see prolonged and intensifying competition in investing in our core assets and areas. We have adjusted to the competition via off market transactions and buying properties with sitting tenants, in doing reducing our capital expenditure on refurbishment projects and freeing up time and capital to add value to existing assets.
We look forward to the rest of the year with the added stability of a majority winning Conservative government and continuing our focus and efforts on building upon our rental income revenues, and letting the vicissitudes of the markets play out around us while we continue with our long term strategic plans.