Commercial property investment ''to get riskier'' - commercial mortgages

25 May 2007

Concerns have been voiced that investment in the commercial property market could become increasingly risky in the future, after nearly a decade of bullish conditions.

For business investors looking to take out commercial mortgages this could spell less than stable conditions ahead.

Recently, both Land Securities and rival group British Land have stated that commercial property market conditions could be getting less favourable, fears which are echoing throughout the industry at large.

One expert, property economist Ed Stansfield, maintains that a long boom has led to increased risks for the coming future.

"Property looked cheap compared to bonds and equities, but the long boom has meant property firms are now looking fairly expensive," he told the Daily Mail.

"The risks of investing in these types of stocks are going to grow."

Higher interest rates also mean that it is more expensive for property firms to take on debts in order to fund large developments, problems that could be fuelled if rates rise further, as is widely anticipated.