Lenders and borrowers in the commercial property sector are remaining positive for the year ahead, according to industry analysts.
The impact of Covid on the property market altered the needs of borrowers, which are different now as the green shoots of the UK’s economic recovery help the sector regain lost ground.
Investors are looking for quick and stable returns. With the war in the east threatening global markets, the UK’s commercial property sector remains buoyant. Commercial property offers a good investment opportunity in the UK to earn a regular income, as it delivers higher rental rates compared to residential properties.
As far as lenders are concerned, they will need to adapt to the ever-changing conditions and be more flexible around the types of funding they offer- and the way those loans are structured.
The rise of challenger banks and alternative lenders, and the demand for more specialist financing, explains the growth in demand for bridging loans. The stamp duty holiday meant £171.69m more bridging loans were transacted in 2021 compared with 2020.
Regulated bridging loans accounted for an average of 40.8 percent of all contributor transactions during the 12 months. In 2021, lending surged during the third quarter, at £190.24m, as buyers attempted to take advantage of the stamp duty holiday before it ended.
Demand for regulated bridging was highest in the first half of the year, accounting for 47.7 percent during the first quarter and 41.6 percent the second quarter as homeowners rushed to complete before the end of the stamp duty holiday at the end of June, before falling to 37.7 percent in Q3 and 36 percent in Q4.
To summarise, the UK commercial property market is well poised for a stronger 2022 and beyond.