Commercial property "performing well" - commercial mortgages

19 October 2006

Property investors, including those with commercial mortgages, have benefited from strong total returns, according to a new report by F&C Property Asset Management.

In its latest commercial property market review, the firm states that property has yielded returns of over 20 per cent per annum, although total returns for the third quarter stood at 3.7 per cent, the lowest this year.

The strength of the market for people with commercial mortgages is largely attributed to "inflows of funds" which have driven down yields, the company reports.

F&C comments: "Whilst the third quarter performance could reflect a summer lull or a shortage of stock, we believe that the market is approaching its peak.

"The market has been characterised by a lack of quality stock and there remains strong competition and high prices are being paid for such property."

A recent survey by the Royal Institution of Chartered Surveyors revealed that the strong economy had contributed to optimism within the construction industry, particularly due to the "booming" commercial property market.