Tuesday, October 19, 2010

Commercial Property Prices Falling

Moodys today released the REAL/Commercial Property Price Index index which dropped by 3.3% in August.  (Pricing on 2 month delay similar to residential home price indices)

The much acclaimed "bottom" for commercial property appears to be rolling over once again as can be seen by the chart below.  The bright spot for commercial properties this year have been the A+ properties which have been selling at high premiums as investors have piled into the artificial market recovery.

We have seen weakness beginning in the A+ market over the past few months and soon all three (A, B, C) property sectors will begin their next leg downward together.

Banks still continue to hold assets at full value (2007 prices on the chart below) as they extend and pretend that prices will soon recover.  They will not, and the next leg down will be a blood bath.

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