Rise in Landlords Investing in Semi-Commercial Real Estate

Discover why investors are flocking to semi-commercial real estate, with applications doubling in 2024. Learn more in our latest blog post.

Investors are increasingly turning to semi-commercial real estate as a lucrative investment option, with applications with mortgage lender Shawbrook doubling in 2024 compared to the previous year. In 2024, 24% of applications with Shawbrook were for semi-commercial purchases, a significant increase from 13% in 2023. This trend indicates that investors are shifting their focus towards higher yielding assets in response to a less volatile market environment.

Portfolio landlords are seizing the opportunity presented by the current higher interest rate environment to expand their businesses by diversifying their property portfolios. They are looking towards property types such as HMOs, social housing, and semi-commercial properties, which typically offer higher rental yields compared to traditional single lets. Semi-commercial real estate, in particular, are attractive to investors due to their dual commercial and residential spaces, allowing landlords to benefit from multiple income streams and higher yields.

Investors interested in exploring the semi-commercial real estate market or diversifying their portfolios are advised to consult with a broker to gain a better understanding of their options. A significant number of landlords have invested in retail spaces with flats above, with 60% of investors seeking such properties. Additionally, small investors can capitalize on future value generation potential by utilizing permitted development rights to add residential units to their assets.

The South East region has emerged as a particularly attractive target for investors, with 39% of investors in 2024 looking towards the region, compared to 27% in 2023. This shift in investment focus underscores the growing appeal of semi-commercial real estate and other high-yielding assets in the current market landscape.

The increasing interest in semi-commercial real estate among investors reflects a strategic response to market conditions and a desire to maximize returns through diversified portfolios. By exploring opportunities in the semi-commercial real estate market and other high-yielding property types, investors can position themselves for long-term success in the evolving real estate landscape.