Commercial mortgage holders 'may see higher yields'

08 June 2010

Written by Steve Olejnik

Commercial mortgage holders could see an improvement in their earnings later in the year, as one expert expects rental values to rise.

Kelvin Davidson, property economist at Capital Economics, told Mortgage Introducer that the amount tenants pay will stabilise later in 2010 before rising slightly in 2011.

The expert forecasts that all-property rent levels will end the year two per cent lower than at the close of 2009, but will increase 1.5 per cent in 2011 and surge 2.5 per cent in 2012.

However, Mr Davidson added, any recovery was dependent on the strength of the central London office market.

Anecdotal evidence implies that rents on the top properties in this sector have gained ten per cent since the start of the year, he noted.

Research recently commissioned by Reita found that more independent financial advisers would suggest investment in commercial property to their clients, as 66 per cent predict prices in the asset will soar by 14 per cent in the next 12 months.

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