Insurance News Archive

Buoyant commercial property market set for 2007 downturn

Buoyant commercial property returns for the rest of 2006 are likely to be offset by single digit returns in 2007, property experts have suggested.

F&C Property Asset Management believes that at present the market is "close to its peak" and will deliver total returns in excess of 20 per cent for the rest of 2006.

The group believes that the market confidence has been created by a number of factors, including moderating investment flows and the fact that the pace of yield compression is easing.

At present, offices are providing the most lucrative returns in the commercial sector, with F&C Property Asset Management believing it will retain its pre-eminence in the medium-term.

However, the group believes that there will be a downturn in the performance of property due to yield compression ending, with the market more likely to return to a position where returns are influenced by income return.

19 Oct 2006