15-06-2007
Shop prices affected by interest rate rises
The cost of shop premises has been affected by recent interest rate rises, according to the results of a study by Colliers CRE.
Ever since the interest rates started rising in summer 2006, prices in some locations have fallen at least ten per cent, reports the Financial Times.
Moreover, although interest rates remained unchanged in June at 5.5 per cent, a further rise is widely expected to occur before the end of 2007.
"The investment market just ignored several signals," said Andrew James, head of investment at Colliers.
The sentiment was that the occupier market didn't matter because interest rates were still low," he added.
Indeed, according to consultancy firm Capital Economics, the value of commercial property will fall between 2008 and 2010.
If you own a commercial property in the retail sector and are not planning to sell, the drop in value doesn't have to be a problem. If your property is in a good location, rents should be steady and business will thrive.
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