Report Danger Signals For Uk Commercial Property in House prices and the economy Posted December 9, 2006 I recently asked a very serious commercial property investor that I know to answer a hypothetical question. I asked him to imagine that a large portfolio of say 10,000 houses had come up for sale, say from a building society that was looking to unload a massive book of reposessions. I then asked him what would one of the very large UK commercial property firms reaction be to that proposition and what rental yield would they be looking for. He said 4.5 - 5% net (i.e the occupiers carry all the costs of repair and maintaining and insuring the property). At present, residential property is yielding 2.00 - 2.5% net of expenses. That means a commercial property investor looking only at a yield comparison with commercial property would demand a 50% reduction on the current market price of residential property before they would consider investing in it. What this article suggests is that even that comparative valuation might be over optimistic if commerical property really is beginning to get overvalued.