How COVID-19 is Impacting Commercial Finance

Tuesday, August 25th, 2020

As the ongoing effect of the pandemic continues to leave its mark on real estate sector, the commercial part of the market has initially emerged as one of the hardest hit.

But what difference has the pandemic made to commercial finance in the long-term?

With lock-down laws impacting businesses all over Australia, some commercial tenants have been dealt a massive blow to their earning potential and that blow is being passed onto commercial landlords, property managers and real estate agents specialising in commercial real estate sales.

Uncertain Property Markets Can Lead to Investment Opportunity

While many businesses have already been forced into extinction, others have been fortunate enough to maintain almost regular operations, with some businesses performing better than ever, depending on their industry.

For commercial property specialists, that difference has meant that there is no one-size fits all approach to assist those who are struggling and for landlords unable to offer rental reductions to their current tenants, there is no definite assurance that they may easily find another, more financially-stable replacement. But the hard truth is that, when a crisis happens, opportunities can also appear.

How Commercial Investment is Affected by the Pandemic

As so many businesses evolve into new ways of doing business, the impact on existing commercial assets can come in different ways, from retail and office hubs suddenly requiring less space, to some giving up commercial space all together as smaller businesses transition to working from home full-time. As a result, rents in these at-risk sectors of the commercial property market may start to decline, with lack of demand. Conversely, though, commercial property aimed at industrial markets is in higher demand, as a return to local manufacturing grows and, with online sales booming, there is also a greater need for storage facilities for businesses that may not have required the space before.

Securing Commercial Finance

If you are an investor keen to look for the bargains and opportunities that will come onto the commercial property market in the next twelve months, it’s important that you understand how to ensure your application for commercial finance is approved – and to help, working with an experienced mortgage broker, as well as talking to your other business finance specialists, is a positive first step to make sure you know your numbers and can service your commercial property loan.

As competitive mortgage interest rates continue to be offered, and a diverse and growing number of long-lease properties that return high-rental yields start to hit the market, commercial property specialists predict that many commercial assets will, ultimately, enjoy a growth in popularity, as more investors look for alternatives to the weaker growth outlook that is forecast in the local residential market.

2020 hasn’t been the year any of us expected but, with the right planning and support to help you explore new investment opportunities, it could be positive for anyone with the intention of seeking long-term investment growth in the commercial property market.

To learn more about securing commercial property finance, talk to our loan-broking specialists at Loans Actually today.


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