RICS predicts 50% fall in the UK commercial property values by 2010

Posted under General by Michael

Capital values of the commercial property would come down by at least 16% in 2009, according to prediction by the Royal Institution of Chartered Surveyors (RICS). The fall in values would continue in 2010 and touch up to 10%.

Since beginning of credit crunch in 2007, capital values have already plummeted by more than 25%. Going by the predictions of RICS, a drop in the capital value of commercial property will soon be exceeding those witnessed in the 1970 and 1990 recessions.

Senior economist, Oliver Gilmartin, wrote in commercial property forecast published by RICS that commercial property market was only half way through price correction and values were set to fall in 2009 and 2010 as the fall in rental pace would gather momentum. He adds that although transaction activity is going to rise, majority of sellers would accept lower prices.

The report mentions that near-term recovery would be prevented by the rising defaults with no possibility of improvement in the sluggish investment market for some time.

RICS predicts biggest fall in the office sector, with expected drop of 35% in bringing peak to fall by more than 60%.

RICS predicts that further decline in capital values in industrial sector would be around 20% in next three years.