UK Commercial Property ForecastFor office property, which experienced also a 9% drop in capital values in the first three months of 2009, Colliers CRE predicts a quite negative total return of -17.2% for the whole year. However, for 2010 a positive return of 6.1% is predicted. Office equivalent yields are predicted to stand at 9.8% in 2009 and 9.5% in 2010. In terms of rental growth though, Colliers CRE predicts that office rents will continue to drop not only through the remainder of 2009 but also through 2010. In particular, office rents are predicted to plunge 20% in 2009 and an additional 12% in 2010. For industrial property, which experienced a 7.6% drop in capital values in the first three months of 2009, Colliers CRE predicts a total return of -11.1% for the whole year. However, for 2010 a positive return of 7% is predicted. Industrial equivalent yields are predicted to stand at 11% in 2009 and 10.7% in 2010. As is the case for the other property types, industrial rents are expected to register notable declines in both 2009 and 2010. In particular, industrial rents are predicted to drop 11.7% in 2009 and 10.2% in 2010. Overall the Colliers CRE UK commercial property forecast predicts that office property will register the most negative returns and rental changes in 2009, while industrial is predicted to register the least negative return in 2009. This commercial property forecast, predicting considerable declines of rents in all three property types, implies that UK investors need to be cautious when buying commercial property and appropriately incorporate such declines in their cash flow projections and estimation of expected returns. You can read the full Colliers CRE forecast here.
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