Back To the 70's For Commercial Property

According to a forecast from the Royal Institute Of Chartered Surveyors (RICS) commercial property will lose 'at least 50%' of value by 2011, making this a worse downturn than those in the seventies and nineties.

RICS' latest commercial property forecast predicts capital values will decline by at least 16% next year with a further drop of 10% predicted for 2010.

The office sector will be the worst hit, with the decline in capital values from expected to be around 60% with the retail market falling by 15 to 20% before 2011.

The RICS expects average rents to fall 10% next year, with the office sector declining 16% in 2009, 11% in 2010 and 6% in 2011. Oliver Gilmartin, RICS senior economist, said: “We are only halfway through the price correction in the commercial property market with values set to fall through 2009 and 2010 as rental declines gather pace. Transaction activity is set to rise, however, as more sellers become willing to accept lower bid prices.”