A market facelift

Grant Bather

June 16, 2007

The commercial sector has undergone a dramatic resurgence over recent years, spurred on by technological advances and changing social situations. With buy-to-let continuing to dominate both the market and the headlines, advisers have started to look at the other options available in the market, including commercial.

Main driver

Buy-to-let has been the main driver over the past five years, as people have been looking at ways to supplement their income or look towards retirement. Indeed, recent estimations by Saga indicated that a growing number of people over the age of 50 were looking at the possibility of becoming a landlord, as a result of the continued growth of house prices, in addition to the controversy and confusion surrounding pensions. With property landlords set to dominate the residential marketplace, eager and established investors have begun to spread their plans to include the commercial sector.

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Kim Barrett, proprietor at KS Barrett & Associates, agrees that investors could look to diversify into new market to secure new income streams, with the commercial market ripe for eager investors and mortgage intermediaries helping to service this need. With growing interest in the commercial market, despite it being in its relatively early stages, Barrett argues that investors and lenders could already be looking at the next market opportunities, with commercial mortgages overseas a topic currently under discussion.

He explains: β€œThe UK has been very active, so it is probably true that the overseas market is now ripe. Opportunistic investors could certainly consider new markets.”

A rightful place

While there remain some sceptics towards the commercial sector, it has a rightful place in the market, and is becoming an increasingly important force within the wider industry. While buy-to-let – be it in the UK, or overseas – is continuing to grow, a greater number of potential investors and advisers are realising the opportunities within the commercial sector.

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Developments in the market range from a checklist for those starting out in the market, to improved online processes and presence and the launch of niche products within the relatively niche, or at the very least, specialist sector. Lenders such as Interbay and Commercial First, among others have also enhanced their online offerings in an effort to better explain their propositions and to expand their customer and client base.

While the commercial mortgage sector is still in its infancy, it is clear that there are very real opportunities for those mortgage intermediaries keen to expand and add another valuable income stream. With the market getting more competitive by the day, those that can offer a service for the niches of the market should seek to benefit.

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