Commercial property pundits forsee both 2009 and 2010 as bleak years

Asked what he expects from the commercial property market next year Ian Cullen, Founding Director, of IPD said:

"The outlook for the commercial property market in 2009 is undoubtedly bleak. We’re not offering a forecast of X percent or Y percent, but the key question is the extent to which a full scale recession kicks in to further damage occupier demand. It is pretty hard to believe that yields will be pushed much further out as a result of pure investment caution. What will happen next, and what is already happening is a pattern of falling rents which reflects lack of occupier demand in the financial sector. We know the problems there. The retail sector beginning to suffer through failures in the High Street and elsewhere and a period of some length - in the early ‘90s that was 40 months - of negative rental movements.

Circumstances were very different in the early ‘90s. The bubble that was burst a rental bubble, not a yield bubble and so we don’t necessarily anticipate the same sort of playing out of the market in 2009 and ’10 as we saw in the early ‘90s. But to anticipate a return to positive total return territory in 2009 I think is very, very optimistic indeed".

Economists are now starting to write off 2010 as well as 2009 as being bad years, typical of them is Charles Davis, Economist, of CEBR said:

"I think 2009 we see a full year of contraction in the overall economy obviously in that consensus view. 2010 we saw the Treasury forecast in the pre-budget report as perhaps too optimistic. They forecast something of a bounce back in 2010. We see 2010 as actually relatively difficult. So another probably reasonably stagnant year then. 2011 holds more promise. But we do see this as a very serious downturn.

I mean the Bank of England acting as it is may well help to get things moving 12, 18 months down the line. But there are serious risks as banks go through this deleveraging process and we reassess where we are in the market."

About UK Business Property

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