A new report has shone a light on the UK’s commercial property market, highlighting student housing as the next opportunity for landlords and investors. The mortgage lender Together released a report, “Opportunities and Outlook; the future of commercial property,” unpacking the trends and treasures of real estate investment.

Student Housing The Investors’ Darling

According to Together’s findings, student accommodation is stealing the spotlight, with almost a quarter (23%) of landlords placing their bets on this sector as the most lucrative investment over the next 12 months. Housing developments and luxury residential properties are also catching eyes with 21% and 19% of landlords, respectively, seeing them as appealing opportunities.

Chris Baguley, from Together, paints a picture of a vibrant UK commercial property scene, bursting with diverse opportunities. From student digs to swanky apartments and the transformation of old retail spaces, the market is ripe for growth. Baguley’s words echo a sentiment of optimism, bolstered by economic recovery, promising rich pickings for those ready to dive in with the right financial backing.

The Financial Landscape

The report projects a ballooning in commercial lending from £90 billion in 2023 to an impressive £118 billion by 2028. This leap comes amid a backdrop of economic challenges, including stubbornly high inflation and interest rates that have left investors and developers navigating a tightrope of costs and borrowing pains.

Yet, there’s a silver lining. The commercial property market is showing resilience, adapting to the high-interest era with strategies that include diversifying investments and recalibrating portfolios to protect against dwindling returns.

A Bumpy Road Ahead?

Rob Thomas, an economist with the Intermediary Mortgage Lenders Association (IMLA), points to a period of adjustment as the sector grapples with the realities of a higher interest rate environment. This landscape demands a strategic shift towards minimising risks and exploring new avenues for growth.

Despite these challenges, the mood among property professionals remains buoyant. Many are seizing the moment to bolster their portfolios, leveraging a dip in property prices as a launchpad for expansion. This bullish behavior underscores a broader trend of resilience and ambition in the face of adversity.