By Rob Starr, Content Manager, Big4.com
The decline in value of commercial property will bottom out in 2013 and the latter half of the year will be marked by rising values, according to the Real Estate Predictions report from Deloitte. Values fell 44 per cent from peak to trough during the recent downturn and whilst they recovered 18 per cent thereafter, they fell away again over the last 13 months to remain 37 per cent below their 2007 peak.
“Firstly, we saw large downwards shifts in pricing during 2012 particularly for secondary stock. It appears these values are now getting close to a ‘mark to market’ level where investors begin to see some value and are willing to transact,” says Anthony Duggan, partner and head of research at the firm.
“Secondly, we are beginning to see real shortages of new/Grade A quality stock in many locations as the low – non-existent in many cases – levels of development activity feed through into falling availability levels. While we do not expect to see widespread rental growth for some time yet, the potential for increases in some locations has certainly improved in recent quarters. This should underpin yield levels where applicable.”