Commercial mortgage demand "fairly healthy"

07 April 2011

Written by Jeni Browne

Large returns in the real estate market means there is "fairly healthy demand" for commercial property at present, a trend which could see a rise in the number of firms taking out business mortgages.

Ed Stansfield, property economist at research consultancy Capital Economics, said many companies and individuals are still worried about the risks of delving into the commercial property market.

This is mainly due to the threat of rising interest rates alongside cutbacks in the public sector, which many fear will result in a fall in occupier demand.

However, if investors believe premises are in a good area that can attract tenants, "there is still plenty of evidence that suggests there is fairly healthy demand for commercial property because of the high yields that are being offered", Mr Stansfield noted.

His comments follow the news earlier this month that Standard Life Investments predicted close to double-digit yearly returns for commercial real estate in the medium term.