Funds and analysts reckon recovery not due until 2011
(LONDON) The outlook for UK commercial real estate has worsened as fund managers and analysts predict a steeper drop in capital values this year, with a recovery not due until 2011, consensus data showed on Friday last week.
In its quarterly survey, Investment Property Forum said that property experts have cut their expectations for the UK market in the last three months, now projecting capital values to fall, on average, 17.9 per cent in 2009 and 3.8 per cent in 2010.
The experts predict capital values to return to growth in 2011, rising on average 4.1 per cent over all commercial property sectors - office, industrial, and retail, IPF said.
The previous estimates, compiled last November, were for an 11.5 per cent fall in 2009 and a decline of 0.8 per cent in 2010.
'The downward revisions in the 2009 and 2010 forecasts are unsurprising given the worsening economic outlook as GDP continues to fall and unemployment rise,' said IPF, which surveyed 30 fund managers, advisers, and equity analysts.
'Limited occupier demand appears expected to meet rising supply and there is little sign of any expectation that investor demand is going to stabilise falling capital value growth in the short term,' it said in the report.
Benchmark data from Investment Property Databank showed commercial property values in the UK have on average sunk by 37.4 per cent since the market peaked in June 2007. -- Reuters
Source: Business Times, 10 Mar 2009
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