Commercial property market boosts construction - commercial mortgages

05 October 2006

The construction industry is experiencing significant growth due to strong commercial and housing markets, according to a new report.

Research by the Royal Institution of Chartered Surveyors (Rics) found that 21 per cent more of its members reported a rise in activity, particularly within the commercial property which it states remains above the average for the fourth consecutive quarter.

The Rics suggests that the strength of the market for people with commercial mortgages is having a positive effect upon the construction industry.

"A strong economy and booming housing and commercial property markets have boosted optimism," it says.

However, despite the current "healthy economic outlook", the Milan Khatri, chief economist for the Rics, believes that further interest rates may "cool" the property market in 2007.

In its forecast earlier in the year, Rics predicted that returns from commercial property would decline due to decrease in the number of purchases.