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Commercial property values 'likely to flatten out'
Commercial property prices are not set to increase in the coming months, an expert has suggested.
Kelvin Davidson, property economist at Capital Economics, stated the rest of the year is more likely to see values remain level and "stay flat thereafter".
His comments follow reports from CB Richard Ellis, which found business property capital growth was at 0.6% in June.
This meant the year-to-date rise in property values stood at 6.8.
Mr Davidson said: "It is not something that we are surprised about – it is something that we have been expecting."
People are currently deciding whether or not they are willing to pay higher prices for certain buildings.
And there is a certain amount of concern over financial and economic issues, such as whether incomes are likely to remain stable.
Mr Davidson noted some are still wondering whether Britain will face a double-dip recession and there is uncertainty over the coalition government's fiscal policy, which could be holding some investors back from buying.
All these matters combine to make property investment perhaps look less attractive than it did during the previous year, he added.
However, this does not necessarily mean commercial property prices will drop.
In fact, Mr Davidson predicted there will simply be a lull in values that will continue for the rest of 2010, which is something his firm has been forecasting for some time now.
And for some time after, this will probably be the case, because there may not be a monetary policy to deal with an economic recovery that forces a rise in values, he added.
CB Richard Ellis' monthly index noted offices were performing strongly, with central London commercial properties proving particularly popular and giving high returns.
But those outside the capital under-performed, with total returns of 0.5% in June, compared with 1.8% in central London.
Posted by Sarah Smith
Kelvin Davidson, property economist at Capital Economics, stated the rest of the year is more likely to see values remain level and "stay flat thereafter".
His comments follow reports from CB Richard Ellis, which found business property capital growth was at 0.6% in June.
This meant the year-to-date rise in property values stood at 6.8.
Mr Davidson said: "It is not something that we are surprised about – it is something that we have been expecting."
People are currently deciding whether or not they are willing to pay higher prices for certain buildings.
And there is a certain amount of concern over financial and economic issues, such as whether incomes are likely to remain stable.
Mr Davidson noted some are still wondering whether Britain will face a double-dip recession and there is uncertainty over the coalition government's fiscal policy, which could be holding some investors back from buying.
All these matters combine to make property investment perhaps look less attractive than it did during the previous year, he added.
However, this does not necessarily mean commercial property prices will drop.
In fact, Mr Davidson predicted there will simply be a lull in values that will continue for the rest of 2010, which is something his firm has been forecasting for some time now.
And for some time after, this will probably be the case, because there may not be a monetary policy to deal with an economic recovery that forces a rise in values, he added.
CB Richard Ellis' monthly index noted offices were performing strongly, with central London commercial properties proving particularly popular and giving high returns.
But those outside the capital under-performed, with total returns of 0.5% in June, compared with 1.8% in central London.
Posted by Sarah Smith
Mon, 12th Jul 2010