“THE MARKET FOR COMMERCIAL PROPERTY IS EFFICIENT” DISCUSS

By:

AKINDELE, DOLAPO BOSE
Word Count: 2,807

FACULTY OF BUILT ENVIRONMENT
UNIVERSITY OF THE WEST OF ENGLAND
BRISTOL

1.0 INTRODUCTION
The commercial property, as we aware, is one aspect of the property market but with a much increasing velocity, it has fast become a market to be reckoned with. Not only is it viewed as just a market type, it is now a major consideration for investors. Direct investment by UK institutions and overseas investors, attracted by the long leases and secure income, have poured huge investment into commercial property, and the market has provided an enormous valuable alternative to gilts and equities (Harris R. 2005). Though the property industry will appear to be insignificant when compared to other sectors with only two property companies, Land Securities and Canary Wharf, qualifying for inclusion in the FTSE 100, the top 100 companies by market capitalisation (value of shares), as at April 2001, importance is placed on the commercial property sector (Freeman, 2005).
The property market is also of consideration to the government as well because as much as it is contributing to the economic growth of the nation – as at the end of 2003, the total value of the commercial property stock was a whopping £611bn (RICS, 2005) – it is beclouded by its own issues and failures.
This purpose of the paper is to examine the commercial property market, its dynamism i.e. driver of change, it efficiency and inefficiencies and government intervention to cub or reduce the market failures that will be noted. It is structured as follows: Section 2 will give the definition of commercial property market and the description of the market efficiency – both for text book description and for what is obtainable in the market. Section 3 will outline government intervention to