The findings suggest a bleaker outlook for the market in 2011, following a 6.6% increase in UK commercial property values during 2010, says the survey by Investec Specialist Private Bank’s Structured Property Finance division.
It found that 84% believe values will fall or stabilise. Over half, 57%, expect property valuations to stay the same over the next 12 months while 27% believe that valuations will fall.
Of those predicting a decrease, one in six, 16%, expect valuations to fall by as much as 11% to 15%, although the majority, 84%, expect the reduction to be 10% or less. Only 11% of respondents believe that valuations will increase.
The research reveals that UK property professionals expect the retail and leisure sectors to offer the biggest investment opportunities for 2011, followed by the office and then industrial sectors.
Yield predictions from property professionals for 2011 are somewhat divided for commercial property, with around a quarter, 26%, expecting yields to stay the same as a cross sector average, one in five , 20%, believing that they will decrease, while 17% expect them to rise. A further 11% expect to see an initial decrease followed by an increase, while 8% anticipate the reverse of this.
‘Our research suggests a bleaker picture for the market during 2011, following a year of moderate growth in 2010. The fact that a significant proportion of the property community are feeling bearish about commercial valuations suggests that there is still a lot of uncertainty over the UK economy,’ said Gary Dobson of Investec's structured property finance division.
‘We have however seen a significant uptick in demand for lending on commercial development projects in the past year and our appetite for involvement in strong deals has not diminished,’ he explained.
‘We still anticipate that 2011 will present some exciting opportunities for property developers and look forward to partnering with both current and future clients to help make their investments a success,’ he added.
