UK IFAs are increasingly fearing a fall in commercial property prices, according to a survey carried out by Reita, a trade body for the quoted property and REIT sectors.

In its July survey of IFAs, Reita found that 24 per cent of advisors believe that prices are to fall, rising from just 6 per cent in January. Last month advisors were also more sceptical that prices will rise: in January 73 per cent predicted a price hike, while in July this proportion fell to 49 per cent.

But while fears of falling prices have increased, respondents to the survey were still keen to explore commercial property investments for their clients. Almost half of those surveyed said that investors should be interested in REITs and funds investing in them. That said, it would appear that while advisors are interested in these types of investments, they are less confident in advising on the pros and cons of the different sub-sectors of commercial property. Only a third said that they were confident in this regard, and according to Patrick Sumner, Reita’s chairman, understanding these distinctions is crucial.

“The growing concerns among advisors reflect justifiable uncertainty about the economy over the next year or two, mainly in the light of public sector cuts. Recent news of falling house prices exacerbates these concerns, but there are big regional and sectoral differences,” said Sumner.

Funds focusing on central London property and the higher end of the retail space are better positioned, said Sumner.

“The preponderance among the leading UK REITs of central London and high quality retail property sets them somewhat apart, as do their relatively strong balance sheets and access to financial markets. We are in the early stages of a slow economic and commercial property market recovery, in the course of which there will be the odd lurch, but shares, in my view, are trading at the cheaper end of fair value, and dividends are sustainable,” he said.