Property owners are under-investing: Valente & Conrath

Commercial property owners are not investing enough on maintenance and they risk seeing their assets become obsolete, according to JP Morgan's Joe Valente and Charles Conrath.

Before the 2008 financial crisis, commercial property owners invested 3% to 3.5% of the value of their assets on maintenance, according to figures from JP Morgan Asset Management's European real estate team and analysts at IPD. Since 2008, that has fallen to 2%.

In a jointly authored opinion piece, Valente and Conrath suggest that, 'this is not a big issue in itself: companies can still work in buildings which are slightly obsolete, but it means that newer buildings are likely to stand out.

'It will take a number of years for the market to recover from such a long period of under-investment. During this time, newly refurbished and newly redeveloped buildings are likely to command a slightly higher premium than normal,' they conclude.