Reits ''signal end of commercial property boom'' commercial mortgages

09 May 2007

A negative performance of the UKs Reits market could spell the end of a boom in UK commercial property, according to industry experts.

Reports in the Wall Street Journal highlight UK Reits as the worst performing in the world this year to date, contributing to a downgrading of the sector by analysts and the end of an ongoing boom in commercial property.

Interest rate fears and speculation of a downturn in the UK property market have been highlighted as key reasons for the poor performance of UK Reits, which could alter commercial mortgages uptake in the future.

Part of the problem is that UK Reits generally pay lower dividends than Reits in other countries. The latest FTSE EPRA/Nareit Global Real Estate Index states that UK commercial property returns have fallen by 8.3 per cent over the past year.

A third of respondents to a recent IFA Online survey stated that they would not invest in property this year.