''Challenging'' times ahead for UK commercial property - commercial mortgages

02 April 2007

An expert is warning that there could be "challenging" times ahead in the UK commercial property market, in a climate of over-confidence from investors.

Leading property investor Gerald Ronson of Heron International warns that present trends in the commercial property market might not necessarily continue in the future.

Mr Ronson raises concern over the ability of many property fund managers to cope with market pressures, highlighting declining yields in UK real estate.

"I wouldn''t hire some of these property fund managers to do my shopping at Tesco," Mr Ronson told Finfacts. "They are in charge of massive sums of investors’ money, but they only know one market, the bull market.

"The next few years will be challenging in the property business."

It is thought that in the long-run this could impact upon the uptake of commercial mortgages and possibly deter investors from putting money into the market.

CB Richard Ellis has reported that the UK accounted for a third of all commercial property deals in Europe, but percentage growth was the smallest of all 25 countries surveyed.