Like other asset classes, commercial property has taken a real hammering in value over the course of the credit crunch. Unlike stocks and corporate bonds, however, investors have not seen much of a rally to date. The FTSE-100, for example, is up around 50 percent from its lows eight months ago.
Commercial property, meanwhile, has plumbed the depths but is only just beginning to show signs of recovery. It could therefore represent good value for money, argues Standard Life Investments.
Across the country, commercial property has fallen in value by an average of 40 percent, with the hardest-hit areas such as London office space dropping by even more. Some analysts have suggested that commercial property is at roughly the same stage that the stock market was back in April – just around the ‘point of inflection’. Even if values do not rise far in the short term, lower prices have led to proportionally higher yields.