Commercial property recovery ‘may take five years’


Commercial property in the UK will not recover to its pre-credit crunch levels of value until at least 2014, a new report suggests.

Despite many analysts’ talk of ‘green shoots’, any economic upturn is expected to be hesitant. Many pPortfolios were overvalued in 2007, hence the severe correction that saw almost 50 percent wiped off them.

Office space, particularly in London, was especially badly hit, and is expected to take even longer to return to its former levels of profitability than elsewhere in the UK. Although capital values are now beginning to bottom out, further downward negotiations in rent are likely as tenant companies continue to struggle to stay afloat.

A silver lining comes in the form of a different report, which suggests that rents may be buoyed by hard-pressed businesses sub-letting any free space to other companies to help make ends meet.