Published December 11, 2008

Property investments seen lagging others in 2009

(LONDON) Real estate professionals think that the performance of property investments will lag behind other asset classes next year, a survey conducted at the Thomson Reuters' Global Property Outlook conference showed on Tuesday.

In a poll of around 150 market observers, analysts and investors, just 12 per cent of respondents said that they felt property would perform more strongly than stocks, bonds and alternative investments next year.

Just over a third of those surveyed said that bonds would be the wisest investment in 2009, while 39 per cent indicated a preference for stocks.

The findings show how confidence in commercial property investment has plunged since the credit crunch and the climax of a global real estate boom collided last year.

An acute shortage of debt has sidelined all but a select few property buyers, and has helped to cut average commercial real estate values by up to a third in the hardest-hit markets of Britain, Ireland and Spain.

Despite the speed of the correction, which some market observers claim has already surpassed that seen in the early 1990s, around two-thirds of those surveyed said that they believed it would be more than a year before market conditions showed any signs of improvement.

More than half said that they expected to see total property returns - a combination of rental income and capital value growth - of minus 10 per cent and worse in the UK, eurozone and the US next year.

Respondents were only slightly more optimistic about Asia, where 48 per cent predicted that total returns of minus 10 per cent or worse in mature markets such as Japan and Hong Kong versus 41 per cent for emerging markets such as China and India.

Taking an average from across all four geographies, less than 16 per cent of those polled believed that real estate would generate a total return of zero or better in 2009. -- Reuters