Green shoots in the commercial property market

The commercial property market in the UK has taken some hits since the onset of the credit crunch, with a lack of finance and confidence contributing to declines. However, new figures appear to indicate that both of these factors are returning, which could mean now is a good time to consider an investment.

At least that seems to be the case in London, as according to Cushman & Wakefield, commercial property investment in the capital has risen for the first time in two years.

Not since the second quarter of 2007 was an increase seen, but the last three months brought an improvement of 110 per cent in the West End and City & Docklands areas. Just under £680 million was invested in the first quarter of this year, but that grew to £1.43 billion.

Much of this doubling was attributed to an influx of overseas property buyers, with Clive Bull, head of central London investment and partner in Cushman & Wakefield's London group, noting that 60 per cent of transactions in the West End were completed by those from abroad.

"Their interest has been fuelled by a perception that the London market represents relatively good value, the continuing weakness of the pound and the lack of competition from the traditional UK/Irish debt buyers," he said.

However, one expert has suggested that lending for the purpose of investing in commercial property is on the up, which may also have contributed to the statistics.

Michael Aglony of Mortgages for Business explained that his own company's figures have shown a 171 per cent increase in such mortgages in the second quarter of the year, compared to the preceding three-month period. This reflects a "positive shift" that has been seen of late, he suggested.

"In the last month or so we have had quite a few more commercial cases than we have done for the whole of the year," Mr Aglony remarked. "On the commercial side of things, it is more positive than quite a few other areas."

What remains to be seen, however, is whether a recovery is truly taking place or whether the figures are a statistical anomaly. Mr Bull was optimistic in his assessment, explaining that the evidence points to further good news on the horizon.

He noted that £275 million of stock is under offer in the West End, while £167 million worth of deals have exchanged but are yet to be completed - which could well indicate that commercial property is indeed seeing some green shoots after all.