Landlords are turning to commercial property investments as borrowing costs fall and the market improves, a lender’s data has found.
Internal data from Shawbrook showed that there was a 102% annual rise in the share of lending allocated to commercial property purchases since last year.
The lender said the rise was most notable in the South East, which accounted for 30% of all commercial property purchase lending. Shawbrook said strong transport links, steady economic growth and high demand made the region popular with investors.
There has also been a trend of property investors diversifying their portfolios, Shawbrook found, as its data revealed a rise in applications for semi-commercial cases. This rose 13% from 2023 to 2024, pointing to a shift to high-yielding assets.
Shawbrook has recently reacted to these trends by increasing the maximum loan to value (LTV) available for retail, healthcare, education, and industrial assets.
Daryl Norkett, director of real estate proposition at Shawbrook, said: “The commercial property market is recovering after a turbulent period, with several sectors showing renewed signs of growth. Investors are keen to expand and diversify their portfolios with high-yield, high-income properties like commercial, semi-commercial, and houses in multiple occupation (HMOs).
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“These assets not only offer potentially higher returns, but diversification can also help to build resilient portfolios even in uncertain markets. However, investors should conduct thorough research, as risk profiles can vary significantly across regions and asset types. Speaking with a specialist commercial broker can provide invaluable guidance on the best options available.”
In its most recent trading update covering Q3 2024, Shawbrook revealed its loan book exceeded £15m for the first time.
