King Sturge have warned the UK commercial property market could be experiencing a “false dawn” and predict that the “mini boom” could fade away by the end of 2010.
Commercial property investors are being warned to be cautious about the current upturn as King Sturge fear depressed conditions could last until 2012. There are worries the rise in rents, mainly across the capital, could lead to the market being “overvalued” again. This in turn could lead to falls which would continue well into the next 24 months.
Property economist Kelvin Davidson of Capital Economics has said they don’t expect to see strong economic growth in the next 12 months and believes the small-scale boom the UK market is currently experiencing could become an issue if it continues for a prolonged period of time.
“Our forecast is that you will see this mini boom – not only in London, but across the country – fade out later this year,” he said.
CB Richard Ellis’ Monthly Index recently showed UK commercial property posted its largest monthly gain since records began 9 years ago. December’s 3.3% rise was the 6th consecutive monthly rise since July 2009. It showed Central London offices were up 3.7% but down 2.1% for the year.
Cushman & Wakefield also recently reported that London rents have risen for the first time in 3 years.