(LOS ANGELES) Commercial real estate prices in the United States dropped 1.5 per cent in December, the second consecutive monthly decline, indicating that the market is at the start of a slump, Moody’s Investors Service Inc said.
The 1.5 per cent fall measured by the Moody’s/REAL Commercial Property Price Indices is worse than the 0.2 per cent drop in November, New York-based Moody’s said on Tuesdayday in a report. It was the fourth-largest month-on month drop in the 84-month history of the indexes, the credit-rating company said.
The commercial property market has been hurt by a decline in credit availability, making it costlier to buy real estate. While the number and total value of sales tracked by the indexes in December were above average for the last two years, it was the third price decline in the past four months, Moody’s said.
‘The jump in volume in December of 2007 is likely to be atypical before a softer pace sets in,’ analysts led by Moody’s senior vice-president Sally Gordon said in the report. In December, transactions tracked by Moody’s totalled US$7.1 billion. ‘Some borrowers and/or lenders are eager to close before year-end for one or another financial reason,’ it said.
The Moody’s indexes are based on the repeat sales of the same apartment, industrial, office and retail properties across the US at different points in time.
Moody’s tracked 352 transactions in December.
Source: Bloomberg (Business Times 21 Feb 08)