Landlords are increasingly focusing on semi-commercial real estate, as applications have almost doubled in 2024 compared to 2023.
This is reflected in Shawbrook’s latest data, which shows that despite only being halfway through the year, the lender has already seen 24% of semi-commercial applications for new purchases, compared to just 13% in 2023.
This is because the market has become less volatile in recent months, leading investors to expand their portfolios with higher-yielding assets.
The Southeast in particular has been an attractive target for investors; in 2024, two-fifths (39%) were looking at the region, compared to a quarter (27%) in 2023, according to Shawbrook application data.
Looking further at the types of properties landlords have invested in, 60% were looking for retail space with apartments above. For small investors, many of these assets also offer the potential for future value creation through the use of permitted development rights to add residential units.
Daryl Norkett, Shawbrook property proposition director, commented: “Property investors are adapting to a higher interest rate environment, with portfolio landlords seizing the opportunity to grow their business with a wider range of assets. We are already seeing this in the inquiries we have received recently, with investors looking for property types such as healthcare organizations, social housing and semi-commercial properties that typically offer higher rental yields than traditional detached rental properties.”