Commercial mortgage holders 'see stronger returns'

07 June 2010

Written by Gavin Elley

Commercial mortgages holders saw higher earnings in May after office space outperformed for the fifth consecutive month, according to a report by property adviser CB Richard Ellis.

The research showed that total returns on offices stood at 1.4 per cent and capital uplift was at 0.9 per cent, driven by a the strength of the market in central London.

Overall, the value of commercial properties had increased by 6.2 per cent year-on-year and was up by around 17 per cent since mid-2009.

Total returns on all property slid back to 1.2 per cent in May from 1.6 per cent in April, which economics and investment analyst for the firm Nick Parker claimed was due to investors feeling the market is "fully priced".

"Despite this, the recent downward pressure on gilt yields has reinforced the positive risk premium for property, implying attractive relative pricing," he added.

Offices in London saw the greatest capital growth of 1.4 per cent, compared with 0.9 per cent for those outside of the capital.

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