Commercial property investment is rebounding strongly as we approach the end of 2020, with spending in the autumn surpassing levels recorded at the beginning of the year. The message is clear: lenders are open and investment opportunities are available.

According to data from Colliers International, investment in commercial real estate was £3.2 billion in September, the highest total for six months. Preliminary data for October suggest that spending in that month was even higher.

Which sectors are behind the rise in property investment?

So, what is driving this growth? Encouragingly, investment is taking place across the asset spectrum, with serious buyers identifying opportunities in a wide range of areas. The near-total absence of inexperienced buyers, whose activity tends to inflate prices, is a key factor behind this trend.

In terms of individual sector performance, residential property is continuing to attract investment. By October, the private rental sector had already seen investment worth £3.8 billion, the highest total of any year prior to 2018.

Key to this trend is the continuing unaffordability of house prices for younger people, which is sustaining demand for good-quality rental accommodation, in particular for properties located close to central business areas. Another important factor is the ongoing undersupply of housing in the UK, with this supply-demand imbalance critical to the performance of the private rental sector.

Furthermore, the retail property investment sector is picking up again, with interest in supermarkets and retail warehouses growing notably after a subdued six months.

What is fuelling investment in healthcare real estate?

Another commercial investment sector performing well is healthcare property. According to property firm Knight Frank, spending reached record levels in 2020, at over £2.2 billion so far, compared with £1.76 billion in 2019.

Furthermore, a strong end to the year is expected in this sector, fuelled by continuing interest in care homes and private hospitals, as well as rising demand in more specialist areas, such as mental health, learning disability and children’s services.

The importance of the right approach for property investors

The arrival of second lockdowns, across the UK and Europe, is a reminder that investment in commercial and semi-commercial property should be approached with caution. However, as investment levels in 2020 suggest, the commercial real estate market is resilient.

It is clear that there are good commercial property investment opportunities and that this real estate is providing good returns. Capital is available for buying investment property and, with the right commercial loan and mortgage lender, serious investors can take advantage of favourable market conditions and secure good deals.

To find out more about A&T Business Associates services, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.