Less than one in 20 UK commercial property experts believe a fast-paced recovery in

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asset values will continue in 2010, while tenant demand and rental growth remain under pressure, a survey out on Monday showed.

Benchmark data in the latest Expert Panel survey, by online real estate portal Reita, shows average commercial property values have gained about 9 per cent since July, although this has been driven by prime quality, well-located buildings.

Some investors fear values of secondary property in less popular areas may take up to 18 months to catch up with soaring prices in locations such as Mayfair and the City financial district, both in London, the survey showed.

Experts also worry measures taken by government to curb Britain’s rising national debt could exacerbate this ‘two-tone’ rebound by compressing tenant demand and rental growth.

“The only economic certainty is that public spending will be severely cut by the next government and that people will have a lot less money to spend as a result,” Peter Cosmetatos, director of Reita, said.

“This will undoubtedly have an impact on business and on the take-up of commercial space. With that in mind we should tread very carefully when making any predictions over long term market recovery this year,” he said.

Reflecting this pessimism, 5-7 per cent of the Expert Panel said they did not expect to see a fall in secondary property yields before 2011, up from 29 per cent in the last survey.

Forty-eight per cent of the respondents expect returns for listed property firms to be slightly worse than direct property over the coming 12 months, up from 21 per cent last September.

Last week, the UK real estate sector was the worst performing equity sector at minus 4 per cent, with UK Reits (real estate investment trusts) showing returns of minus 6.5 per cent in the year to date compared with minus 1.7 per cent for the FTSE All Share index, analysts at Nomura said.

“Rental values outside the prime areas will continue to slide and banks will carry on being highly selective in their lending activities as they work to shore up their balance sheets,” said Patrick Sumner, chair of Reita and head of property equities at Henderson Global Investors.

Reita's Expert Panel consists of leading industry experts from more than 30 different organisations and firms.