Commercial Investment Property

Last year saw an overall slump is real estate - both in respect to commercial and residential real estate investments. Commercial real estate investments performed reasonably well in the first half of 2007 but fell considerably in the second half.

Some industry players are still positive about commercial real estate investments. It is felt that commercial real estate investments need still not be ruled out because the supply-demand ratios are not out of proportion and there has not been tremendous overbuilding in any asset class. Moreover, the setbacks faced by commercial real estate investments in the US and UK have been softened by globalization of the market.

In spite of tougher financing in the wake of the global credit squeeze, commercial real estate investments in emerging markets will continue to be attractive into 2008.

The so-called "Bric" economies of Brazil, Russia, India and China are taking increasing proportions of global commercial property investments, whilst the US credit crunch is adding to pressure on commercial real estate investment in financial centers such as New York, London and Tokyo.

There are advantages though for commercial real estate investments in this market that can be leveraged later as properties are being hugely discounted now. Schroders, is predicting that value may soon emerge for commercial property investments after a correction in pricing. The market may become a bit cheaper, but going forward investments in commercial real estate make sense as the floor may soon be in sight.

Residential property investments

Lack of liquidity may be driving the residential market down, however the buy-to-let market is seeing a boom. Paragon Mortgages’ latest Buy-to-Let Index showed average yields rose to 6.3% in January - their highest level since March 2006 - up from 6.2% in December. As with investments in commercial real estate, globalization also has impacted residential property with continued strong demand in emerging markets.