Property values drop

Jul 2 2008 by Graeme King, The Journal

PROPERTY investors estimate that prime UK commercial property values have fallen by an average of 10% in the past 12 months, with secondary values falling by 14%, new research has shown.

The study commissioned by Investec Private Bank’s structured property finance division, also found nearly one in five of those interviewed estimated that secondary valuations had actually dropped by as much as 20%.

Looking ahead, 39% of respondents believe UK commercial property valuations will continue to fall throughout the next 12 months, but the majority (57%) think values will begin to stabilise after falling in the first part of the period.

At the top end of the residential market, 53% of respondents predict a fall, 17% defied the doom and gloom by forecasting an increase, and 30% thought they would remain the same.

Paul Stevens, of Investec Private Bank’s structured property finance team, said: “The correction in UK commercial property valuations was under way well before the credit crunch started last August and the research demonstrates how the impact has been greater on secondary rather than prime property.

“However, this study suggests that most investors are willing to call the bottom of the market this year and this would explain why such a high number are either maintaining their exposure or looking to increase it.”