By Lucy Waters - Managing Director for Aria Finance
Mortgage Strategy
When Allsop's November 2025 commercial auction raised £31.8 million, something revealing happened. Just over three-quarters of buyers paid in cash. Every buyer surveyed said they'd be looking to purchase again. Thirteen lots sold for more than 10% above reserve.
This wasn't distressed selling to opportunistic bargain hunters but evidence of genuine conviction returning to the market.
After two years of watching commercial property values fall approximately 20% from their peaks, investors are asking a simple question: has the market hit rock-bottom and turned the corner? The answer appears to be yes, and the window for early positioning may be narrowing.
Have we reached the inflection point?
UK commercial real estate recorded its first positive capital growth in two years during Q2 2024. Yields have since stabilised at around 7% after their sharp rise through 2022 and 2023. And in Q2 2025, total commercial property investment was at its highest level in 13 quarters.
When yields stop climbing and hold steady after a decline in property values, it tends to be a signal that repricing is complete.
Meanwhile, rental values have quietly continued growing throughout the entire downturn, albeit very slowly. Occupational demand in most sectors never disappeared, even when the drop in capital values made it seem that way. Apart from the retail market, demand in other sectors of commercial have remained steady. Now, with yields stabilised and rental growth intact, the conditions for capital appreciation are falling into place.
The lending market is responding accordingly. After hitting a low in 2024, commercial property lending surged 33% YoY in the first half of 2025. It is clear that the commercial property market is buzzing with potential.
Why quality matters more than ever
In the coming weeks and months, it will become clear that not every opportunity is created equal. Prime assets with strong tenant covenants are attracting competitive lending and stable valuations. But it’s in the secondary market, by contrast, where property is trading at much lower prices with significantly higher yields.
For conservative investors, quality assets are now available at valuations that were unthinkable 18 months ago, backed by eager lenders. Those who are more adventurous with their capital can target secondary locations and mixed-use properties offering double-digit yields, but only with rigorous underwriting of commercial covenants.
What happens next
It is clear that some investors are already making the most of the opportunities where property values have hit the floor and are making a comeback. That investors are purchasing at the rate they are now, despite general property market uncertainty is telling.
The question for investors is around timing. Commercial property historically rewards those who position during the uncertainty, not after consensus forms. The Allsop November auction results suggest smart money is already moving. When buyers pay cash, trade above reserve, and unanimously say they'll buy again, they're signalling their view on where the market is headed.
Perhaps these cash purchases are also revealing the potential next phase of the resurgence in the market. Those who can immediately take hold of the opportunities in the market are doing so. Meanwhile, there may be those who have identified potential, are ready to purchase, but need alignment from a lender who is willing to take on the risk with them.
It remains to be seen whether the moment for true early adopters is over, but there seems to be a clear opportunity for those who are ready to follow where the indicators are pointing.
Specialist Finance, key for investors who want to act now
Markets don't announce when they've bottomed. By the time it's obvious to everyone, the opportunity has usually passed. The current environment offers something rare: clear evidence of stabilisation, improving fundamentals, competitive financing, and prices still well below previous peaks.
For investors who can evaluate covenant strength, understand complex lease structures, and distinguish temporary and long-term market challenges, the risk-adjusted returns available today are compelling.
Investors are deploying their capital, lenders are already starting to compete more aggressively for deals, and core market fundamentals are stabilising. The institutions are already moving. Lending volumes are up by a third, margins are compressing, and auction rooms are filled with opportunity for those with an eye to spot them.
The data points in one direction. The only question is whether commercial clients are positioned to benefit from what comes next, even if they don’t have the cash to buy property outright. Specialist finance may be their ‘in’ on this still-early stage of what appears to be the commercial property market’s recovery.
