Recovery forecast in 2010 for commercial property
Commercial insurance
1st October 2009
The commercial property market should stabilise over the next 15 months, with growth in total returns likely to increase as a result, one expert has suggested.
Kelvin Davidson of Capital Economics was quoted by Mortgage Introducer as saying his company believes the downturn affecting the sector "is all but over", although it could take a while before capital values begin to rise again.
"Even so, after adding solid income returns, broadly stable capital values would allow total returns to improve to around six per cent in 2010," he added.
The relatively conservative comments, which may be of interest to insurance for business seekers, were made despite historical data indicating that there can be big increases in total returns during the first year of a recovery.
In 1975 for example, there was 11 per cent growth after a 16 per cent contraction in 1974. In 2009, total returns are expected to be down by around seven per cent.
The report comes following the publication of the latest LaSalle Investment Management's European Regional Economic Growth Index, which identified Munich as Europe's most desirable commercial property location, ahead of Paris and London.
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