Commercial property values 'will continue to fall' - commercial mortgages

17 July 2009

Commercial property values may continue to fall for the next 12 months, according to property economist Kelvin Davidson.

Mr Davidson, of Capital Economics, stated that while some yields on prime property are "easing down", but capital values will continue to fall because of lower rents.

However, he noted that the "worst of the downturn" is over, but those considering taking out commercial mortgages should be prepared for the potential of "further falls to come".

Mr Davidson also explained that as June had the smallest decline in values since August 2007, this could signal that "we are heading towards the end of the correction.

Figures reported by Cushman and Wakefield at the beginning of the month indicated that commercial property investment increased during the second quarter of the year for the first time since the same period in 2007.

The West End and City and Docklands markets in London saw a total of £1.43 billion in investments during this period - an increase of more than 110 per cent compared with the previous quarter.