Commercial mortgage holders in prime market 'to see relative stability'

10 March 2011

Written by Simon Whittaker

Commercial mortgage holders with prime assets may not see much change in 2011, although there may be slight falls elsewhere in the sector.

This is according to Ed Stansfield, property economist at Capital Economics, who said: "The market is going to be extremely soft this year with fairly reasonable total returns."

He expects "modest falls in secondary capital values and a fairly stable prime market".

CB Richard Ellis recently reported that the total return on the commercial property market increased from 0.7 per cent in January to 0.8 per cent in February.

However, Mr Stansfield said this figure was not a significant change and predicted the sector would remain stagnant this year.

One of the issues he sees arising is that uncertainties in the labour market may lead to further declines in secondary values, but it is also possible that people will feel they need to make better returns on cash investments and buy property where rents could be improved in the future.

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