Insurance News Archive

Commercial property demand falls sharply

Demand for commercial property is falling at its fastest pace for over six years, it has been revealed.

Rental confidence has also dropped at its quickest rate for a decade, the Royal Chartered Institute of Surveyors (RICS) said.

It means 30 per cent more surveyors are reporting a fall in demand in quarter one of this year, compared to 15 per cent in the last quarter of 2007.

Simon Rubinsohn, chief economist at RICS, said the drop in tenant demand is worrying as it may further weaken rental growth.

However, he added: "While commercial property is likely to remain under some pressure for a while to come, from an investment standpoint yields are now approaching levels where they are beginning to offer some value."

RICS also said data from the British Bankers' Association showed mortgage approvals are at their lowest level since September 2007.

The Bank of England's "swap" deal with lenders should add liquidity to the market, it said, but will not "turnaround the challenging market overnight".

23 Apr 2008