Smaller shops and offices provide "quite good investments" - commercial mortgages

18 March 2008

The commercial property market relies heavily on the economy in a particular area and should be approached with this mindset, it has been suggested.

Tom Entwistle, editor of Landlordzone.co.uk, said that there are "pros and cons" to buy-to-let in both commercial and residential markets.

He explained that the commercial sector in particular is closely interrelated to the larger economy, which may make it more vulnerable in times of broad financial uncertainty.

Those looking for commercial mortgages may be interested in Mr Entwistle''s suggestion that potential investors may want to explore "secondary and tertiary" markets, such as smaller shops and offices in market towns.

"They are probably still quite good investments. These conditions could even start to produce some really good buying opportunities going forward," he added.

Although the commercial property sector has been affected by the current economic turbulence, it has traditionally performed well in the UK, only producing negative returns in three of the past 20 years, according to 2005 data from the Investment Property Databank.