Commercial property supply 'healthier than in last downturn'

07 April 2010

Posted by Michael Aglony

Commercial property mortgage applications could increase in light of new figures suggesting supply of such premises is in a better position than it was during the last downturn in the sector.

Don Jordison, head of UK commercial property at Threadneedle, said development has been more subdued, helping to move away from a glut of empty properties that characterised the previous recession.

Indeed, the volume of new construction in the city of London is a third of what it was in the early 1990s.

Commercial property mortgage customers may therefore be reassured that with development at a stable level, a future boom could be avoided.

"The relatively stable income return generated by property over the long term is what has traditionally attracted investors to the asset class and the resumption of a more normal return profile should reinforce this appeal," Mr Jordison stated.

Individuals looking to invest in commercial property may want to heed the recent warning from the Financial Services Authority, which noted a "meltdown" could occur as a result of those commercial mortgage holders whose companies are in debt.

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