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Property fund managers and analysts have written off all hope of a British commercial real estate recovery in the next year-and-a-half, consensus data showed on Friday.

According to the quarterly survey by Investment Property Forum (IPF), property experts have slashed their expectations for the UK market in the last three months and now project an average 15.7 percent drop in capital values in 2008 and a 5.5 percent capital loss in 2009.

Compared with the previous quarter's report, forecast total returns -- which combine rental income and capital growth -- fell by more than half to minus 10.6 percent for 2008 and sank to broadly flat from 4.7 percent for 2009.

Less pessimistic was the expert prognosis for 2010, where total return forecasts slipped only marginally to 8 percent.

"This is clearly where hope of recovery lies, both in the commercial property markets and the wider economy," IPF said in a note.

Capital growth forecasts for both 2008 and 2009 were deep in the red for all property sectors -- office, industrial, and retail.

Shop and shopping centre forecasts alone showed some expectation of rental growth for 2008 and on a 5-year view but only just, and still well below the current rate of inflation, the IPF survey of 30 property fund managers, property services firms, and equity analysts showed.

According to benchmark data from Investment Property Databank (IPD), commercial property values in the UK have on average sunk by 21 percent since the market peaked last summer. About half of that fall has happened in the first seven months of 2008.

IPD property derivatives are pricing in an 18 percent - 20 percent total capital loss over the course of 2008.

(Reporting by William Kemble-Diaz; Editing by Sharon Lindores)

(See www.reutersrealestate.com for the global service for real estate professionals from Reuters).

Source:  http://uk.reuters.com/