IFAs expect drop in commercial property prices
The number of financial advisers expecting commerical property prices to fall has continued to increase.
Research carried out in October 2010 on behalf of Reita showed that 26 per cent of IFAs believed prices would drop or remain static over the next 12 months.
At the start of the year five per cent believed there would be a price drop, rising to seven per cent in April and 21 per cent in July.
Peter Cosmetatos, director of policy at the British Property Federation, claimed a lack of confidence in the commercial property market reflected both the views of many industry specialists and the uncertainty felt in the UK economy more broadly.
He said: "With close to 500,000 public sector job losses expected in the wake of George Osborne’s comprehensive spending review, the knock-on effect in the demand for commercial property may well be considerable.
"We would expect the effects to be felt most acutely in areas heavily reliant on the public sector or public expenditure."
Despite increasing concerns over commercial property values, investor confidence in real estate investment trusts (Reits) appears robust, according to the data.
Of those expressing a view either way, over 57 per cent indicated they would be interested in Reits and funds that invested in Reits.
Mr Cosmetatos added: "The UK’s leading Reits not only tend to be focused in London, which is significantly less exposed to the public sector, but are also concentrated at the better quality end of the property market where there is strong demand both from occupiers and from investors.
"This means Reits are not a good proxy for the commercial property market across breadth of the country, which remains polarised."