US commercial property prices renewed their steep decline in July as sector prices were down nearly 39 per cent from peak levels two years ago, said Moody’s Investors Service in a report. Moody’s/REAL Commercial Property Price Index (CPPI), released on Monday, showed its 10th consecutive decline in the index with a sharp 5.1 per cent drop in July.
Prices in office, retail and apartment properties had eased to 0.1 per cent in June, but reversed course in July to remain more in line with earlier slides of 7.6 per cent in May and 8.6 per cent in April.
After its latest decline, the CPPI index now stands 30.8 per cent below its year-ago levels and 37.5 per cent below the level seen two years ago. Overall, commercial property prices have now declined nearly 39 per cent since the peak of October 2007, Moody’s said.
The US$6 billion US commercial real estate market is a key focal point for the Federal Reserve and US lawmakers who have pegged it as a particular danger to the nascent economic recovery. Programmes aimed at reviving lending are just getting underway, but the efforts are complicated as falling revenue and prices are reducing value of the properties and causing defaults. Continue reading
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