What 2010 holds for the commercial property market

Tuesday 5th January 2010

Whilst 2009 packed enough volatility and uncertainty into the commercial property market to last us at least another ten years, pundits are already queuing up to try and pinpoint how the peaks and troughs of the next 12 months are going to shape up.

At the end of last year, commercial property values were undergoing a surprising recovery, increasing month on month and even growing by a substantial 2.4% in November according to the IPD index, which made it the steepest monthly rise in 15 years.

This followed a period of crashing values, as commercial property prices plummeted by a record 40% since their peak in the summer of 2007.

However, property experts have been lodging their cautiously optimistic outlooks for 2010, with many predicting a year of positive returns from property, although it is not widely believed that prices will continue to climb at the same pace.

Property consultancy CB Richard Ellis told the Financial Times newspaper that there would be a “steady rise” in property investment activity, with a particular focus on prime property.

London is also predicted to profit from the property recovery, with intrepid investors sticking to central London offices and good quality retail parks, whilst the outlook for poorer-quality stock remains tentative.

Although encouraging signs are there, forecasters have expressed caution in leaping back into the market as it remains to be seen how the crisis in Dubai, quantitative easing, unemployment and higher taxes will affect the recovering market.

Neville Pritchard, head of UK investment at property agency, King Sturge, noted: “Whether it is a V, W, or a ‘corrugated’ recovery, it is not a straight line up from here.”