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Commercial property price plunge bottoming out

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New figures showing a slowing of the plunge in commercial property returns are an “encouraging sign” for local government pension funds, according to one analyst.

Commercial property saw a loss of one percent month-on-month in February but this constituted a marked improvement on the losses of 1.6% in January and 3.7% in December, according to figures from the real estate performance analyst IPD.

Capital values fell by 1.5% in February after a two percent fall in January and a 4.2% fall in December.

Hoong Wey Woon, who manages the Igloo urban regeneration fund at investment house Morley, said the latest figures were positive news for local authority pension funds which must include property in their portfolios.

However, he saw no rapid easing of the situation.

“Overall, the UK commercial property market has gone through a difficult six months and we expect that this will continue through the first half of 2008,” he said.

“Today’s IPD figures are an encouraging sign for institutional investors. But it is important to remember that these are just a month’s figures.”

IPD research manager Angela Sheahan said that February’s easing of property repricing “should not make us complacent”.

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