"In a market where attractive commercial property opportunities may be scarce and time-sensitive, bridging finance becomes an invaluable tool."
With the recent Budget now behind us, there has been much discussion over its impact — or lack thereof — on the commercial property market. Investors and small business owners alike may have felt there wasn’t much to get excited about. However, the mere fact that it’s a known quantity may still pave the way for renewed interest in commercial property investment. With established clarity around fiscal policies, could this be the opening that commercial investors have been waiting for? And, in this context, how can bridging finance offer essential support?
A settled policy landscape
With the unveiling of the first Labour Budget in over a decade, the commercial property sector now faces fewer unknowns. While the macro-economic outlook remains cautious, with modest GDP growth forecasts and continued slow recovery in productivity, the removal of uncertainty around future fiscal changes could still be a positive for investors. The OBR’s projections indicate that, while business investment has seen a 15% decline since 2016, the Budget’s framework around government spending on infrastructure could indirectly boost commercial property returns. Compared to some of Europe’s major markets, the UK could even appear relatively low-risk to non-domestic investors, now that future economic policies are more predictable.
Stable rates and the commercial market’s path
Interest rates, another crucial factor for commercial property investors, seem to have a stable trajectory post-Budget, with a steady quarter-point reduction still within reach each quarter. Although the reduction may not accelerate as some anticipated, the gradual pace offers investors the potential to capture favourable pricing before an anticipated market upturn. Investors monitoring the commercial sector may see this stability as a cue to act, since it is expected to return to positive growth in 2025.
The rising cost of doing business
One of the Budget’s more challenging aspects lies in the increased costs facing many businesses. Adjustments to business rates, National Insurance, and minimum wage requirements mean operational costs are likely to rise, particularly for sectors such as retail and leisure. While the government suggests businesses will offset these with efficiency improvements, the reality is that some may pass these costs on through increased prices or by limiting employee pay rises. Over time, this could weigh on business confidence and growth, meaning commercial property investors may face a slightly slower expansion landscape. However, those positioned in sectors benefiting from new government spending on infrastructure may find unique opportunities amidst the evolving market.
Leveraging bridging finance in a cautious climate
In a market where attractive commercial property opportunities may be scarce and time-sensitive, bridging finance becomes an invaluable tool. For investors eager to capitalise on favourable pricing or secure properties under tight deadlines, bridging loans provide the quick, flexible funding needed to act decisively. This is particularly important in today’s environment, where certainty around the Budget may tempt some investors back into the market.
For example, bridging finance can allow investors to raise capital for new acquisitions, even when traditional mortgage solutions are time-consuming or unavailable. Deals like these have been seen across the UK, enabling commercial property investors to quickly seize properties ranging from retail units in prime urban locations to high-demand office spaces. This rapid access to funds can mean the difference between closing a deal or losing out in competitive markets.
Is now the time to enter the market?
With the UK’s commercial property sector stabilising and government spending likely to support infrastructure growth, the post-Budget landscape offers a degree of clarity. For those considering bridging finance as a means of accelerating their entry or expansion in the market, the timing could be right to act.
As financial brokers and advisers assess this new certainty, bridging finance will continue to play a key role, enabling commercial investors to navigate the marketplace with a degree of nimbleness. For those ready to move past the caution of recent years, the potential of commercial property investment may well be worth exploring in the months to come.
