RICS comment on Scottish Equitable

Commenting on the news that Scottish Equitable has introduced delays of up to 12 months on its commercial property fund, Simon Rubinsohn, RICS chief economist said: "The news that more property funds are closing their doors to instant withdrawals is not an unprecedented experience in markets where liquidity is in short supply. The turmoil is largely a reflection of the downturn in commercial property prices. Earlier this week, IPD confirmed that the average value of commercial buildings dropped by more than 4% in December alone. Transaction activity in the sector has been hit hard as the credit tap has been turned off as lenders look to scale back their balance sheets. It does however follow a period of remarkable strength in the commercial market.

"We expect prices in the sector to continue to retreat over the course of 2008 as investors adopt a more cautious stance. Crucially, occupier demand for property still remains firm and while the economy is set to slow, there are few signs of the recession that would undermine this vital prop for the market."