Friday, September 19, 2008

Commercial Property Recovery In UK

LONDON (Reuters) - Property fund managers and analysts have written off all hope of a British commercial real estate recovery in the next year-and-a-half, consensus data showed on Friday.

According to the quarterly survey by Investment Property Forum (IPF), property experts have slashed their expectations for the UK market in the last three months and now project an average 15.7 percent drop in capital values in 2008 and a 5.5 percent capital loss in 2009.

Compared with the previous quarter's report, forecast total returns -- which combine rental income and capital growth -- fell by more than half to minus 10.6 percent for 2008 and sank to broadly flat from 4.7 percent for 2009.

Less pessimistic was the expert prognosis for 2010, where total return forecasts slipped only marginally to 8 percent.

"This is clearly where hope of recovery lies, both in the commercial property markets and the wider economy," IPF said in a note.

Capital growth forecasts for both 2008 and 2009 were deep in the red for all property sectors -- office, industrial, and retail.

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