Increasing demand drives office market - commercial mortgages

09 February 2007

Investors with commercial mortgages may be set to benefit from strong returns from office properties, according to one market expert.

Paul Herrington, managing director of F&C Property Asset Management, has claimed that improving tenant demand and a limited supply of properties, particularly in Central London, has seen investor demand for offices increase.

Although acknowledging that the property market appears to have "slackened" over the last six months, Mr Herrington argued that high demand among institutional and retail investors will continue to support the sector.

"Property is becoming increasingly accepted as a major alternative asset class, which will support the investment demand further, albeit at more modest levels," he remarked.

Clerical Medical recently reported that commercial property has delivered the strongest performance of any other asset class over the last decade.

According to the firm, the commercial property sector has provided investors with annual returns of 13.6 per cent over the last ten years.