Commercial property upturn ‘will not last’

Posted 01/02/2010

The current signs of recovery in the UK commercial property market are unlikely to develop into a sustainable, constant recovery.

This is the view stated in a new report by the Ernst & Young ITEM Club, which expressed concern that the end of government and bank incentive schemes will curtail recent strong performance.

It stated that the three per cent rise in commercial property prices in December 2009 are a short-term response to values hitting rock bottom.

Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club, said this cannot be interpreted as a sure sign of sustainable growth, particularly given the forthcoming end of initiatives such as quantitative easing.

He added: “It is difficult to see how the level of recent activity can be sustained.”

This echoes observations from Capital Economics last month, which suggested that commercial property is currently experiencing a “mini boom” which is likely to subside later in the year.