Our short term bridging loans are for purchase, refinance, property improvement or to unlock working capital for business purposes.
This unique overdraft provides you with a flexible drawdown facility giving you instant liquidity and avoids heavy setting-up costs.
Individually structured loans for residential and commercial projects, with finance available for site purchase, construction and fees, refinance, equity release and to provide working capital. Loans are available up to 90% of the site cost.
Flexible first and second charge non-regulated loans available on terms from 3 to 5 years.
We have a commitment to innovation and with the ever changing financial landscape around us we have designed a range of unique Specialist Lending products that solve a range of property finance needs.
By Jonathan Rubins, Director & Chief Commercial Officer at Alternative Bridging Corporation
The UK commercial property market offers a compelling opportunity for investors seeking consistent returns and capital appreciation. However, navigating this market requires a different approach compared to residential investments. In this article we explore the UK commercial property market in 2024, and how a Commercial Bridging Loan can help.
After a period of relative stagnation, property experts are predicting a rise in investment volumes compared to recent years. Some claim that the UK commercial property market will reach a turning point in 2024. This presents an excellent investment opportunity for those seeking consistent returns and long-term value growth.
One factor driving this optimism is the anticipated hardening of prime yields in certain sectors and locations. While interest rates are expected to dip later in the year, prime yields may see a slight increase. This translates to potentially higher returns for investors, making the prospect of entering the market even more attractive.
Furthermore, the way businesses operate is evolving, and the demand for commercial space is adapting accordingly. Sectors like logistics and life sciences are experiencing a surge in growth fuelled by the rise of e-commerce and advancements in healthcare. Investing in properties that cater to these growing industries can offer significant benefits through rising rental values.
Sustainability is another major force shaping the commercial property market. Tenants are increasingly prioritising properties with high energy efficiency ratings and eco-friendly features. This trend presents a chance for investors to capitalise on the demand for sustainable properties. Ensuring their holdings remain competitive in the long run.
The potential for lower borrowing costs adds another layer of appeal. With the expectation of a decrease in base rates later in 2024, financing a commercial property investment is likely to become more affordable.
While the overall commercial property market offers promise in 2024, two specific niches stand out for investors seeking strong returns.
The e-commerce boom has created a surge in demand for well-located logistics and industrial properties. Warehousing and distribution centres are particularly attractive due to:
Residential car parks are an often-overlooked niche that can offer excellent, stable returns at a lower level of risk.
In-depth market research is paramount before buying commercial property in the UK. Understanding the local environment and trends is also crucial. This includes vacancy rates, rental yields for different property types (retail, office, industrial), and the economic outlook of the area. Tools like property price indexes and local authority reports can be valuable resources.
The mantra of “location, location, location” holds even more weight in commercial property investment. Prime locations with high footfall or excellent transport links are naturally more attractive to tenants and command higher rents. However, up-and-coming areas with regeneration projects or infrastructure improvements planned can present excellent opportunities for capital growth.
A thorough financial analysis is essential before buying commercial property. This involves scrutinising the property’s rental income history, operating expenses, and potential for future appreciation. Clients should factor in potential maintenance costs and any upcoming lease renewals. They should also engage a surveyor to conduct a thorough property inspection, identifying any structural issues or potential problems that could impact its value.
Commercial leases in the UK are typically longer than residential ones, offering greater income stability. However, it’s crucial to understand the intricacies of the lease agreement. Clients should pay close attention to the length of the lease, rent review clauses, and tenant break options. Seeking legal advice to ensure the terms are favourable is also prudent.
Spreading an investment across different property types and locations mitigates risk. This could involve a portfolio mix of retail units, office spaces, or industrial warehouses. Diversification also helps to hedge against potential downturns in specific sectors of the commercial property market.
Commercial property investment can be complex. Clients should consider seeking guidance from experienced professionals like chartered surveyors, commercial property agents, and solicitors. Their expertise can be invaluable in navigating the legalities, identifying suitable properties, and securing the best possible deal.
Commercial property is a long-term investment. While some properties may offer immediate rental income, others may require renovation or time to find the right tenant. Clients should be prepared to hold onto the property for several years to maximise returns.
Securing traditional financing for commercial property purchases can involve lengthy approval processes. This can be disadvantageous, especially in a fast-paced market where acting quickly can be critical. Here’s where a commercial bridging loan can be a valuable tool.
A Commercial Bridging Loan is a short-term loan secured against the commercial property itself. These loans are designed to bridge the gap between available funds and the purchase price. This allows clients to move quickly and secure the property. The speed and flexibility they offer can be very advantageous in securing a desirable property.
However, it is crucial to have a clear exit strategy in place before securing the loan. This could involve selling another asset, or refinancing the property once it is generating rental income.
By following these tips and conducting thorough research, clients can increase their chances of success in the UK commercial property market. However, it is vitally important to remember that due diligence and professional guidance are crucial for making informed investment decisions. A commercial bridging loan can be a valuable tool to help clients secure the property they desire. Speak to our experienced BDMs today to see how a commercial bridging loan can help.
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