Research conducted by Drivers Jonas (DJ) has identified that rising interest rates is a significant threat to current commercial property valuations and that liquidity in the UK market is decreasing.

DJ predicts there will be an overhang of unsold product this autumn. Howard Richards, partner and head of investment at DJ, said: “Values of secondary property must surely fall this autumn. Re-pricing of some areas of the market is inevitable.”

Values are already falling in parts of the market but DJ feel that prime values will remain robust, especially in London due to both solid rental performance and continued investor demand.
Anthony Duggan, partner and head of research, said: “Rising interest rates are a significant threat to current property valuations. We are already seeing some investors calling a time-out on the UK market until base rates have stabilised. If rates move up only once more, as we believe they will, this certainty should only last 6-9 months before investors are positive enough to re-enter the market and some liquidity returns. However, over this uncertain period we expect to be seeing further reductions in capital value growth and indeed, further instances of capital values actually falling.”