Insurance News Archive

Commercial property 'values will go down'

Commercial property experts are increasingly expressing concern for the sector.

Various managers of funds which invest in property have said that they suffered losses or believe the sector to be unstable following the credit crunch.

What had been one of the most popular areas for investment is now expected to see drops in its value, fund manager John Chatfield-Roberts told the Mail on Sunday.

"Six or seven years ago we were keen," he said. "But now we think the reality of the commercial property market is that values will go down."

And the decreasing values, which has been exacerbated by the credit crunch is leading fund managers to pull their investments in commercial property.

Bambos Hambi, fund manager of a cautious managed portfolio at Gartmore said: "Three years ago I had 15 per cent in UK commercial property. Today, it's four per cent. The growth in values had become unsustainable."

Last month data from the Investment Property Data-bank revealed a 1.2 per cent fall in returns on shops, offices, industrial premises and other commercial buildings, marking the first drop since December 1992.

30 Oct 2007