Commercial property 'set for smaller slump' - commercial mortgages

27 July 2009

The slump in commercial property prices in 2009 is unlikely to reach original predictions, reports the Financial Times.

According to the publication, initial expectations put the estimated fall in commercial property prices at 26 per cent for the year.

However, this has now been revised to 17.5 per cent - a forecast one-third more modest than the original outlook.

The news could have more investors looking to commercial mortgages to buy into the market at the bottom.

Meanwhile, in 2010, prices are expected to drop by no more than three per cent, representing a two-thirds reduction in the initial forecasts.

This could also indicate that 2009 is more preferential as a time to invest than it may have seemed - with commercial mortgages a means of accessing the necessary funds.

Readers of the Financial Times were previously warned that ratings agencies are playing "ping pong" with the commercial property market as they fail to assess commercial-mortgage-backed securities consistently.

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