A 7.2% drop in capital values for commercial properties has been reported for the three months ending June 2008.

The decline was revealed in the latest property index, which illustrates a growth in the pace of the continuing dip.

Market indicators have suggested the sudden fall has been the result of wavering investor confidence, which has doubled the rate of decline (3.3%) experienced during the first quarter of this year.

The Investment Property Databank figures have produced the second successive quarterly negative commercial property value decline. This is a record 13-year low for the index.

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Retail rental properties are suffering worst, with a 8.1% decline during the second quarter of 2008.

Office space capital values fell by 7.3%, with industrial plants experiencing a weaker decline at 2.2%.

These falls came amid a slight recovery in rental values, with a 1% increase across all sectors.

The repricing of the commercial sector has been the byproduct of the looming credit crunch, according to IPD's Angela Sheahan.

She said the current situation reflects "an economy-wide repricing of all risky assets".

Agents have reported a relatively low flux of transactions during the first six months of 2008.

CB Richard Ellis has estimated the value of high street retail properties dropped 33% between January and July.

Prime retail complexes and shopping centres experienced a sharp 26% fall.

Office investments dipped 21%, while retail warehousing fell 26%.

Allied Irish Banks has also said it is projecting a dramatic dip in property values, with predictions hinting at a 30-40% fall-off for the first half of this year.

(PR/JM)