Commercial property prices expected to fall

Commercial property prices look set to fall if a recent report from Standard Life rings true.

The company's Property Income trust saw the net asset value of ordinary shares fall from 62.7p to 60.3p in the six months to 30 June. While the funds purchase of new properties had an effect, a drop in property values was deemed responsible for dip in value.

Jason Baggaley, the trust's manager, noted that the sector is likely to see a "further modest decline in capital values over the next few months". He added: "The decline is likely to be more accentuated for poor quality and less well located secondary and tertiary assets because of the weaker fundamentals, i.e. elevated supply and subdued demand."

Mr Baggaley noted that despite this, commercial property investment remains "attractive from a fundamental point of view", thanks to its "reasonable economic drivers and a constrained pipeline of future new developments".

The South East and Central London tend to show particular strength within the commercial property market, with steadier prices than other regions of the country, according to recent research.

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