Steady growth in commercial property market - commercial mortgages

06 March 2007

The UK commercial property market has shown steady signs of growth in recent years, suggesting increased uptake of commercial mortgages among property investors.

According to the benchmark IPD index the commercial property market has seen average growth and rental returns of 12.6 per cent per year over the past ten years, reflective of a generally strong performance and lucrative investment opportunities.

Strong returns have acted as an incentive for investors in the UK, who have put hundreds of millions of pounds into the commercial property market. To this end a growing number of commercial property funds are being introduced into the market, offering more opportunities for investment.

A number of these funds are now worth billions, such as the Norwich Union property trust which has increased to nearly £4 billion in value.

Despite these positive trends concerns have arisen that the commercial property market could be set for a decline, which could spell bad news for those with commercial mortgages.

"There is only a finite amount of growth out there," explained Ben Yearsley of Hargreaves Lansdown to This Is Money.

"This is probably not the time to increase your exposure to UK property."