The UK’s commercial property market will have lost around 12 per cent of its value between September and the New Year – and this will trigger a new round of buying as investors look to capitalise on favourable yields, one of the UK’s largest property fund managers has claimed.
Schroders, which owns around £10 billion worth of commercial property, says that the commercial property market has reached its bottom. The firm recently cut the valuation of its £2 billion unit trust fund by 12.5 per cent compared to its September valuation.
The move should be seen as a "sign of how far we see the whole market falling before bottoming-out," Mark Callendar, head of property research at Schroders told The Times.
"We think it [the market] will correct itself very quickly," he continued.
"We take the view that the downturn in capital values has taken off some of the investment value gains made in the past couple of years. But we are in a different cycle to the boom-and-bust scenarios of the 1970s and 1990s.
"The economy may not be revving up, but it is still ticking along. There is still plenty of demand for space across all sectors."
One area that Schroders has reservations about is the City of London. City offices may suffer from a lack of demand, the firm says, as leading banks cut jobs after making big writedowns on their loan books.