Leveraging commercial finance in a positive market
The commercial property market in the UK is showing signs of resilience and growth. While lingering economic uncertainty remains, the sector continues to be a key driver, providing new opportunities for investors.
Anecdotally, many investors have been sitting on their hands waiting for the outcome of the Autumn Budget, which ominously promised “tough decisions.” This seems to have been, to some degree, an exercise in expectation management and now that the Budget has been announced, a period of greater certainty coupled with the anticipation of further Bank of England base rate reductions, should stimulate activity.
Growing Confidence
According to September’s Savills Research UK Commercial Report, investor confidence in the commercial real estate market is increasing, with sectors seeing yields stabilise or decrease by 25 basis points in August. Office spaces are a sector that many are closely monitoring. While they’ve shown negative year-on-year returns recently, there is optimism that they’ll return to positive growth by early 2025. Despite a dip in overall UK investment volumes, offices have still accounted for 25% of commercial investments in 2024. The limited supply of high-quality office space is driving rental growth, especially in prime locations, with forecasts suggesting a 3% increase in rental prices across key office markets in 2024. Record rents have already been achieved in many submarkets, highlighting the demand for premium office spaces.
On a positive note, BNP Paribas Real Estate’s August UK Economic & Real Estate Briefing reports that the UK commercial real estate market is entering a recovery phase, driven by political and economic stability following recent elections. With the belief that the UK is on the cusp of a period of Bank Rate reductions and inflation having stabilised, BNP Paribas has raised its investment volume forecasts for 2025, signalling confidence in the market’s growth potential during this period.
Bridging Opportunities
In a market where commercial property opportunities can appear and disappear quickly, bridging loans allow borrowers to secure financing much faster than traditional mortgages. This speed is critical when bidding for properties or making swift acquisitions across the UK.
At London Credit, we’ve seen firsthand how bridging finance is a key tool for capitalising on these opportunities, enabling commercial investors to act quickly in this dynamic market.
For example, we facilitated a £1,530,000 commercial bridge loan that allowed a borrower to refinance an existing lender and raise capital to invest in other properties. This deal involved a commercial investment in Luton, featuring retail units and office suites. With a tight deadline to meet, we worked proactively with valuers and legal teams to ensure the loan was completed on time—illustrating how bridging finance can provide the speed and flexibility required in today’s market.
In another instance, we enabled a borrower to secure a mid-terrace retail property in Stoke Newington, London, for £325,000 with a 65% LTV loan. The borrower, a returning client, needed to complete the purchase within tight seller-imposed timeframes, and thanks to the bridging loan, London Credit made it possible to close the deal efficiently and without delays.
In yet another case, a commercial bridge loan facilitated the purchase of a retail unit in Birkenhead, just outside Liverpool. The £300,000 loan, at 65% LTV, allowed the borrower to acquire the property—despite the time-sensitive nature of the deal—with a longstanding tenant in place. By working proactively with valuers, the team ensured that all necessary steps were completed within three weeks, enabling the loan to close on time and meet the borrower’s needs.
As these examples highlight, bridging finance offers a fast, adaptable solution for commercial investors seeking to capitalise on opportunities, whether they need to refinance existing properties, raise capital for further investments, or secure time-sensitive deals.
As the UK commercial property market continues to recover and grow, brokers and financial planners will increasingly look to bridging loans to provide the agility their clients need to take advantage of opportunities wherever they arise.
Marios Theophanous, Credit Manager at London Credit
