Grosvenor sees global property dip

By William Kemble-Diaz

LONDON (Reuters) - The battered commercial property market is unlikely to recover this year and real estate returns are set to slow globally, the outgoing head of one of the UK's biggest property investors, Grosvenor, said on Monday.

"The further east you go, currently, the better they feel," chief executive Jeremy Newsum told Reuters in an interview. "But international markets are more tied together than they used to be and our comment about expecting lower returns does not except any of our markets."

Grosvenor said earlier that its total returns -- which combine rental income and capital growth -- slipped slightly to 14.4 percent in 2007 and would likely fall again in 2008.

Newsum said real estate globally was entering a period of lower returns as capital appreciation slowed but would remain satisfactory for investors who were not dependent on debt -- at about 8-10 percent.

Privately owned Grosvenor owns or manages 12.9 billion pounds of property assets across four continents, including the estate of one of the nation's richest people, the Duke of Westminster, and large parts of super-prime London districts Mayfair and Belgravia.

Newsum played down the possibility of cash-rich Grosvenor adding to its portfolio this year, even though the firm wanted to increase its exposure to Asia and the United States.

"If I could move all our buyers to the Antarctic for six months that's probably what I would do," Newsum said.

"The temptation to think that this must be the moment to do a good deal is always there but I suspect that at the end of the year we'll look back and realise that the best thing to do was to do absolutely nothing," he said.