Property values to continue to fall

The Royal Institute of Chartered Surveyors (RICS) has announced even worse news for a beleaguered property market with the estimate that commercial property will fall by a further 50 percent by 2011.

This would represent the worst downturn for over 20 years, and this forecast follows the prediction that capital values will fall by 16 percent by 2009.

The hardest hit is expected to be the office sector, as values as expected to be slashed by 60 percent and the same can be said for the retail sector, although manufacturing will fall by only 15-20 percent.

Oliver Gilmartin, RICS senior economist, said that the commercial property market is only half way through experiencing a price correction since the recession has hit, although it is hoped that activity is set to rise as sellers are likely to accept lower bids as businesses struggle.

The investment market will continue to be slow as there is little sign of any short term recovery.
The IPD all property index reveals capital values have already fallen by 28 percent from their peak back in June 2007 and by 2011 there is another 32 percent fall from current levels.

It is the fact that there is continued rise in default rates as well as credit tightening by lending which has slowed down the investment market as well as a fall in confidence.

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