Agence France-Presse . Washington

Investment in big US property projects is ‘waning’ amid a broadening credit crunch and the record price tags won for some commercial real estate deals in 2007 are unlikely to be repeated this year, a survey said Wednesday.

A report on the commercial real estate market by the National Association of Realtors forecast that investment in large property projects would decline sharply this year from last year’s record peaks.

‘Under normal circumstances, near-full occupancy coupled with positive rent growth would be of strong interest to investors, but we’re not seeing that. The credit crunch has filtered into the commercial real estate market,’ said Lawrence Yun, the NAR’s chief economist.

The report stated that some investors are having problems obtaining financing due to the credit squeeze sweeping the banking sector. Investment in US commercial real estate jumped 39.2 per cent in 2007 to a record 427.2 billion dollars, but the NAR projects that investment flows could slump significantly, by between 30 and 40 per cent, this year.

‘Commercial real estate fundamentals are fairly stable, although investment is waning following a record year in 2007,’ the report said. America’s commercial property market has boomed in recent years, especially in New York, where large apartment buildings and landmark skyscrapers have swapped hands for record sums.

In one notable deal late last year, a consortium including a Goldman Sachs fund bought a New York tower block for 1.15 billion dollars from a subsidiary of United Arab Emirates conglomerate Dubai World which had bought the property for 705 million dollars in 2005.

The NAR survey said that some tenants renting office space have put expansion or relocation plans on hold due to economic uncertainty and office vacancies are expected to rise this year. Rents from large retail properties are expected to rise, but by a smaller margin than in prior years.

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