Commercial Finance Specialists

The BNP Paribas prediction that commercial property values will take 15 years to recover to pre-recession values is plausible, it is claimed.

Suggestions that it will take some 15 years for the UK commercial property market to recover to pre-recession levels are entirely plausible, according to an expert.

In a review published earlier this week, BNP Paribas claimed that commercial development assets will take until 2025 to reach values seen before the credit crunch, with prices having fallen by up to 35 per cent compared to three years ago.

Reacting to the claims, Capital Economics property economist Kelvin Davidson said that it was not important to look that far ahead, while there is a difference between real and nominal values.

However, with property investment firms seeing a growth rate of two per cent each year, 15 years is about the right timeframe for prices to recover fully.

"If you think that effectively property prices are driven by rental growth, then rental growth of a couple of per cent a year [would make it] certainly plausible," Mr Davidson concluded.

Posted by Allan Flowers