Rental growth to keep market stable - commercial mortgages

10 August 2007

Rental growth within the commercial property sector will ensure that landlords with commercial mortgages are able to land on their feet as the market slows down, a new study suggests.

The Royal Institution of Chartered Surveyors'' (Rics) commercial property forecast for 2007 has said that the office market will continue to outperform the rest of the sector, with growth peaking at around eight or nine per cent.

Rics also advised that while the market was set to slow down, it believes that many had become "overly pessimistic".

"Hysteria […] has been overplayed with a strong economy supportive of rental growth and positive total returns over the next 18 months," the forecast outlined.

"Lower volatility and diversification benefits will continue to attract investors into the prime commercial property market," it added.

The news backs up recent reports from Knight Frank which also noted the strength of the office market, particularly in London.