The latest research by specialist property lending experts, Octane Capital, has revealed that despite a decline in commercial lending, commercial property prices have shown strong year on year growth of as high as 21% across some regions of Britain.
Octane Capital analysed current commercial for sale stock looking at both the current asking price and for sale stock levels of commercial property across each region of Britain, as well as how these two indicators of market health have changed versus this time last year (December 2022 vs December 2023).
Previous analysis by Octane Capital found that commercial construction lending is forecast to fall by -2.6% in 2023, having already declined every year since 2014.
But while the appetite for borrowing across the commercial sector may be dwindling, their latest research suggests that the sale of commercial property has not been subject to the same decline.
In fact, the average asking price for commercial for sale stock currently stands at £622,825 across Britain, having seen a 3% increase versus this time last year.
However, in some regions, this positive price growth is far more notable, with the South West having seen a 21% increase in commercial asking prices in the last year alone.
Across Yorkshire and the Humber, commercial asking prices are up 13% annually, while Wales (+13%), the East of England (+12%), the South East (+11%) and Scotland (+10%) have also seen double-digit growth.
There has also been an increase in commercial for stock reaching the market, with total stock increasing by 1% across Britain in the last year.
The South East has seen the level of available commercial stock climb by 12% year on year.
While commercial asking prices across the capital have fallen by -5% year on year, London has seen the second largest increase in commercial stock levels, up 8% annually.
The South West (+6%) and Scotland (+5%) have also seen positive growth in this respect.
CEO of Octane Capital, Jonathan Samuels, said, “Commercial construction borrowing has declined quite significantly over the last decade and neither the pandemic nor the more recent hike in interest rates will have helped boost the supply of new stock reaching the market.
However, it’s clear that the appetite for the purchase or commercial property is yet to diminish and we’ve seen positive annual movement both in terms of asking prices and for sale stock levels.
Of course, the health of the commercial sector does differ depending on region, but it would appear that a freeze on interest rates is helping to boost commercial market confidence in the same way it has helped steady the residential sector.”
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