Financial advisors predicting commercial property price decline

New research has found that the number of financial advisers expecting UK commercial property prices to fall has increased significantly since the start of the year.

In January of this year, just six per cent of independent financial advisers (IFAs) believed that commercial property prices would fall, according to new research carried out on behalf of Reita, the education and awareness campaign for quoted property and real estate investment trusts (Reits).

However, by July, this had increased to 24 per cent. In terms of rises, 73 per cent of IFAs predicted in January that commercial property prices would rise, but only 49 per cent felt the same way in July.

Almost 50 per cent of the IFAs questioned in July said that investors should be interested in Reits and funds that invest in Reits, but just over a third disagreed.

Chairman at Reita Patrick Sumner, blamed the growing concern among advisers on uncertainty about the future of the economy, mainly in the light of public sector cuts.

He said, “Recent news of falling house prices exacerbates these concerns, but there are big regional and sectoral differences. The preponderance among the leading UK Reits of central London and high quality retail property sets them somewhat apart, as do their relatively strong balance sheets and access to financial markets.

"We are in the early stages of a slow economic and commercial property market recovery, in the course of which there will be the odd lurch, but shares, in my view, are trading at the cheaper end of fair value, and dividends are sustainable,” he added.

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