Brooke Taylor, commercial mortgage and bridging advisor at Pure Property Finance, says investors are moving towards mixed-use developments as urban living habits change.
According to the British Property Federation, mixed-use schemes accounted for over 35% of new urban developments in 2024, rising from 22% in 2019.
These properties offer income from both residential rents and commercial leases from businesses like coffee shops, gyms and shops.
Taylor said: “Urban living is changing, and naturally, investors are following the money.
“Mixed-use developments, where commercial and residential elements are blended, are proving to be more resilient and profitable, as well as being more future-proofed than a property that offers one or the other.
“London and the Southeast are both densely populated, which is the main reason for mixed-use properties to have a sudden boom.
“Research from Savills has shown that high-street vacancy rates in the areas are falling a lot faster where retail is integrated with residential, creating a vibrant ‘live-work’ neighbourhood that can attract both tenants and businesses too.”
She added: “Investors are acquiring large plots of land, retaining part for their own operations and income, but then subletting the rest, creating a layered income strategy that is a bit more appealing to lenders and market shocks.
“If one side of the property slows down, then the other part will keep the cash coming in.”
Mixed-use properties offer benefits for investors such as lower vacancy risk, faster capital appreciation due to flexible use, and more resilience during downturns.
Taylor noted that lenders are now adapting more quickly to the demand for mixed-use properties.
She explained that financing these projects can be more complex than arranging loans for purely residential or commercial sites, but many lenders have started to offer products tailored to mixed-use and semi-commercial acquisitions.
These options often include flexible terms, interest-only periods, and structured repayments to suit the asset type.
Taylor added that advisors are now focused on helping clients find the most suitable funding packages for their specific needs.
