BCO: Commercial property prices will continue to soften

The British Council of Offices (BCO) predicts that prices for commercial property will continue to soften in 2009.

Chairman of its research centre, Mat Oakley, says commercial property values are likely to continue to drop in the coming months and not stabilise as some analysts predict.

He also believes there are very few investment opportunities available because owners do not want to sell their properties at the moment.

Mr Oakley says that there may have been a more optimistic view in April and adds: "Now we have got some more macro-economic concerns about the property market in terms of tenant covenants, strengths and the prospect of rental growth, so I suspect we will see continual softening into 2009."

He also states that investors are waiting for the right time to buy and says the bottoming-out of the market is not far off.

The UK Monthly Property Index for June 2008 shows that commercial property returns fell by -1.5 per cent – more than twice as much as was seen in May.

On a rolling 12 month basis the all property total return has now hit a record low at -14.9 per cent.

Martin Slowe Property Services are Commercial Property Consultants offering a full range of Commercial Property Services.