Property consultants and chartered surveyors Cluttons released its Commercial Property Market Outlook report for the third quarter of 2012. According to it, the UK’s commercial property market will experience difficulties, declining further in 2013. Secondary values forcommercial properties are expected to fall as a result of lower investorinterest. The biggest losers will be the office and retail sectors, but new stars such industrial and distribution will retain some of the investor demand, the report says. Office and retail One of the main reasons for the dwindling investor demand lies in the gap in expectations of buyers and sellers. In the current economic climate sellers lowering value expectationsis deemed necessary by potential buyers looking atcommercial property investment. London and several other locations are still holding up, but this situation might very well change as even returns from central prime offices in the capital are starting to thin out. And while re-pricing has already started, it’s likely that this won’t save office property returns in 2013. “This process [of re-pricing] still has some way to go” said Sue Foxley, head of research at Cluttons. Retail is another sector that is set to struggle in 2013 and the big contributor to this scenario is the increasing popularity of online shopping. Cluttons’ data reveals the 4 percent decline in retail rents in the UK will be followed by another 2 percent decline in 2013, which clearly shows the sector’s limited potential for commercial property investment. London and the south east are the notable exceptions, where retail rents remain stable. Industrial and distribution And while the outlook for the flagship commercial sectors is negative, it seems that investors’ interest is now focused on assets such as industrial and logistic property, which until now have been considered secondary. According to Cluttons, there is a growing sector in the industry, mainly from overseas investors and UK REITs. Foxley said that total return for industrial properties averaged just over 4 percent. For more information visit iNVEZZ.com
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