Commercial Property Mortgages
Monday March 31st 2008
Lending for commercial property mortgages has been deterred by a weak 2007, but a resilient sector would soon reaffirm its benefits, it has been claimed.The Times Online found commercial property specialists to be positive about the prospects for 2008, due to the long-term attraction of rising rental yields and the benefits of diversifying investment portfolios away from stocks and shares.
Recent market volatility has seen commercial property returns of 15 per cent in the years 2004 to 2006, before dropping off dramatically and bringing an overall loss in 2007 – but experts predicted that 2008 would re-establish the sector's long-term profitability.
Rob Martin, of fund manager Legal & General, told the Times: "We think 2008 will be a year of two halves.
"In the first half prices are expected to remain weak but in the second half the picture could be a lot brighter as yields stabilise and total returns move back into positive territory."
Losses on commercial property over 2007 were due to a drop of nearly eight per cent in capital value, more than offsetting positive rental yields of 4 to 5 per cent.