Commercial property owners and investors are being struck by the falling values of their properties.
According to fresh research the majority of UK property specialists believe that commercial property valuations will fall or stabilise over the next 12 months. It was established that of those surveyed, over half expected property valuations to remain the same over the next twelve months, while 27% felt that valuations will fall.
Today the Birmingham Post stated Birmingham based property investment firm Real Estate Investors (RLE) have revealed a huge swing into the red after being hit by a fall in values. In the article Paul Bassi, owner of RLE, revealed that his company had taken a £4.1 million hit after the revaluing of their commercial properties, which downgraded the value of RLE’s properties by around 7.5%.
RLE chairman John Crabtree placed the responsibility for the falling commercial property values squarely on the shoulders of the banks, announcing “valuations in UK regions remain depressed, largely due to the lack of bank finance, leading to very limited transactions.”
Despite this there still remains cause to be optimistic in the commercial property market. It is these falling values which are leading to an increase in interest in commercial property as an investment opportunity.
Platinum Porfolio Builder has revealed that it has seen a 20% increase in the number of potential investors using its services during the first quarter of 2011, compared to quarter 4 in 2010.
Founder of the group, Nick Carlile, reasons that this could be due to the fact that people are looking for divergent ways of finding returns on their investments. He observes that in today’s economic climate, it is difficult to save in bank accounts because of high inflation rates.
It is well known that commercial property developments can offer a sustainable long-term investment opportunity. A study from Investec Specialist Private Bank’s Structured Property Finance division, has stated that they expect the retail and leisure sectors to offer the largest investment opportunities for 2011, followed by the office sectors.
It is also believed that the desire for lending on commercial projects is growing once again and is anticipated that 2011 will present numerous exciting opportunities for commercial property developers.
The commercial property market is always a difficult one to read for owners, purchasers and indeed tenants, but many believe that it is in situations like today’s that the best commercial property opportunities can be found.
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