Anthony Bolton, one of the City’s star stockpickers, has called the bottom of the commercial-property market, which is now yielding 7.5% following heavy falls in prices since the height of the boom in 2007.

The call comes despite predictions from the Royal Institution for Chartered Surveyors (Rics) that prices for shops and offices could fall another 25% to 50% from their peak. There are also fears the recession will send some corporate tenants to the wall.

However, Bolton reckons such yields — at more than 4 points above Bank rate — more than compensate for the risk.

Millions of investors waiting out the slump in commercial-property funds run by the likes of Norwich Union and New Star — which have lost 21% and 22% respectively — will be hoping he is right.

The outlook for the residential market in 2009, on the other hand, suggests more pain to come. Analysts predict prices have between 10% and 20% further to fall, having dropped about 15% since October 2007, according to Nationwide building society.

Prices may not start to recover until 2010 to 2011, and are unlikely to regain their highs until 2014 if the market follows the 1990s property crash.

Tim Drayson, an economist at Legal & General Investment Management, said it could take as long as a decade for prices to return to their peak.

Capital Economics, the consultancy, pointed to a gathering storm in the buy-to-let sector, warning that prices for new-build homes could fall by as much as 45%.

We look at the prospects for property.

COMMERCIAL PROPERTY

While Anthony Bolton thinks commercial- property yields are compelling, it may be some time before the sector shows growth.

Barclays Wealth said: “As we suspected, 2008 turned out to be a year when the bottom fell out of the UK commercial-property market. It appears there is still plenty of adjustment to come. At best, a bottom might be reached near end-2009.”

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