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Realistbear

R I C S: Property Returns To Fall 17% This Year In Commercial Sector

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http://uk.biz.yahoo.com/060405/323/g8ggy.html

Thursday April 6, 12:45 AM

UK commercial property returns to fall 17 pct in 2006 - RICS

LONDON (AFX) - UK (LSE: ATUK.L - news)
commercial property returns are set to decline by 17 pct
in 2006 and by 9 pct in 2007, according to forecasts released by the Royal Institution of Chartered Surveyors.
A rise in public investment and in demand from institutional investors over the next two years is expected to be offset by a drop in foreign investment demand as the cost of funding increases, RICS asid.
Foreign-based investment in UK commercial property is likely to come under pressure as the cost of financing rises in the US, the euro zone and Japan, RICS said.

Looks like crash territory (17% is not an insignificant number) to me. Note the reason for the huge drops: cost of funding. Perhaps RICS is alive to the worldwide trend in more expenisve money? Reality dawns first in the commercial sector then it hits the house market.

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Guest Winners and Losers

RB - don't you know the Halifax BANK has said that house prices are still rising? They will never fall. You are so doom and gloom. ;)

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2 things.

(1) Please remember this thread next time you accuse the RICS of being a VI trying to talk the market up. (I'm not saying they are completely unbiased but they try to be reasonably honest and accurate IMHO)

(2) Total returns have been running at about 19% (unsustainably high). Total return is initial yield plus capital value rise or fall. Therefore initial yield = 6%. Capital growth = 13%. Total return =19%.

If this return goes down 17% to 2% it implies that initial yield is still 6%, capital growth = -4%, or -6% in real terms. Not pretty, but not a 17% price fall.

FF

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2 things.

(1) Please remember this thread next time you accuse the RICS of being a VI trying to talk the market up. (I'm not saying they are completely unbiased but they try to be reasonably honest and accurate IMHO)

(2) Total returns have been running at about 19% (unsustainably high). Total return is initial yield plus capital value rise or fall. Therefore initial yield = 6%. Capital growth = 13%. Total return =19%.

If this return goes down 17% to 2% it implies that initial yield is still 6%, capital growth = -4%, or -6% in real terms. Not pretty, but not a 17% price fall.

FF

Subtracting percentages from each other.......very bad!!

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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