Slowing economy slows property demand

27 July 2005
The sputtering economic climate is impacting the fortunes of the commercial property industry, according to a Royal Institution of Chartered Surveyors (RICS) report.

The second quarter saw a drop in the overall demand for business property with more chartered surveyors reporting a fall in business and companies becoming more apprehensive in their forecasts.

However the office market is rising, as expansion continues in the business services and financial sectors.

RICS found that higher interest rates and a sustained slowdown in consumer spending over the past 18 months have contributed to the lower demand for retail property.

Their data also found that the investment in commercial property would see prices soar due to historically low long-term interest rates.

RICS vice president Graham Chase said: "Investment appetite for real estate is being fuelled by low interest rates and is drawing more and more from private individuals. But businesses are less inclined to buy, signalling that firms are more hesitant about expansion in the current economy."

Interest rates are expected to fall soon, which may provide some support for the economy later in the year.

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