Are Commercial Property Markets Flattening?

OBSR's Simon Molica asks property managers for their views about the future of the commercial property sector

Simon Molica 28 October, 2010 | 4:20PM
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Investors have seen a remarkable recovery in property market conditions over the last 18 months.

The UK commercial property IPD index peaked in August 07 and subsequently fell over 35% bottoming in July 09. Lending markets almost completely closed in some areas and at the same time demand from tenants was weak. UK property funds experienced significant redemptions prompting them to sell properties into a falling market in order to raise cash.

From its nadir the IPD index has recovered more than 25%, as at the end of August 2010, in a rebound that has surprised many observers. Lending conditions have eased and a flurry of international investors have re-entered, supporting this recovery form an arguably oversold position. As recent as two years ago, UK property funds were trying to raise cash but now are in the reverse position, making significant property purchases in 2010 on the back of huge fund inflows to the sector.

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Simon Molica

Simon Molica  is a portfolio manager for Morningstar Investment Management

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