New economic forecasts ‘could affect commercial property market’

Posted 14/06/2010

The recovery of the commercial property market in the UK could be set for a slowdown if new economic forecasts prove to be accurate, according to an expert.

A report from Investment Property Databank (IPD) has suggested the Office for Budget Responsibility’s conclusion that the UK’s previous economic growth forecasts were overoptimistic may have implications for the commercial property sector.

Malcolm Hunt, head of UK client services, explained: “Historically, property markets suffer when economies falter, affecting occupier markets and rental growth which, in turn, influence property values.”

The warning came alongside new monthly figures which showed that the rate of UK commercial property growth slowed for the second month in a row in May 2010 to 0.5 per cent.

IPD stated that this is due to “a moderation in yields and rental decline”.

This comes after CB Richard Ellis’ monthly property market report for May, published earlier this month, also suggested that the sector’s recovery is slowing down.