UK commercial property ''has peaked'' commercial mortgages

17 May 2007

The UK commercial property market has reached a peak according to experts at Land Securities, suggesting that prices could be set for a downturn in the future.

Businesses looking for new commercial property opportunities may benefit from lower prices in the market, potentially making commercial mortgages more affordable in the long run.

At present the UK''s commercial property market is worth somewhere in the region of £710 billion, but with declining buyer demand concern has arisen over future profitability. Land Securities chief executive Francis Salway warns that some commercial property will fall in value.

"A small proportion of properties will be worth less than they were six or nine months ago," he told the Times. "This is a big deal. We have had four years when everything was going up."

In recent years the UK commercial property market has seen strong returns, averaging 18 per cent per year since 2004 according to Mr Salway.

Bank of England data reveals that lending to the UK''s commercial property industry is showing increasing signs of stabilisation.