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RICS: Commercial property to halve in value

UK commercial property will have more than halved in value by the end of the decade as rental demand continues to wane, the Royal Institution of Chartered Surveyors warned today.

The RICS predicts that the commercial property market will see a fall of at least 16 per cent in capital values in 2009 and up to 10 per cent in 2010.

Capital values have already fallen 25 per cent since the onset of the credit crunch in June 2007.

This would mean steeper falls than in the recessions of the 1970s and early 1990s.

RICS senior economist Oliver Gilmartin said: "We are only halfway through the price correction in the commercial property market, with values set to fall through 2009 and 2010 as rental declines gather pace.

“Transaction activity is set to rise, however, as more sellers become willing to accept lower bid prices.”

The biggest declines are likely to be in the office sector, with capital values expected to drop a further 30 per cent to 35 per cent, bringing peak-to-trough declines in excess of 60 per cent.