Commercial property to "shrug off" interest rates rise - commercial mortgages

19 January 2007

Although last week''s interest rate rise came as a surprise to many people within the financial markets, an expert predicts that investors in commercial property may not be affected.

According to Quentin Fitzsimmons, head of government bonds at Threadneedle Investments, there was little indication that things had changed within the economy since the Bank of England''s decision in December to suggest a rate rise was likely this month.

However, Mr Fitzsimmons argues that property investors, such as those with commercial mortgages, may find that the market is not affected by the rates rise.

He states that, "unlike residential property, which has a closer correlation to interest rates, commercial returns are dependent on a much wider range of factors, so we are not anticipating any major impact".

Aitchison Rafferty recently reported that the outlook for commercial property in 2007 is "promising".

The firm stated that the market is expected to perform well due to a strong economy and significant demand for both freehold and leasehold commercial properties.