By Daryl Loo

LONDON (Reuters) - ING Real Estate has raised concerns that a recent rise in UK commercial property prices could lead to a bubble, possibly causing values to fall again by end-2010, one of its senior executives said on Tuesday.

"The size of that downturn will depend on the actual rate of the capital appreciation that we see now ... if it's too big you could create a bubble," Kevin Aitchison, CEO of ING Real Estate Investment Management UK told Reuters in an interview.

The view echoed other major property investors who warned this month Britain's commercial property market recovery could be short-lived, if prices rise too quickly without growth in the economy and rental rates.

UK values rose 1.1 percent in September, as they start to recover from a two-year downturn that saw valuations plunge 45 percent, the benchmark Investment Property Databank (IPD) index showed last month.

ING Real Estate, one of the world's largest property investors with a portfolio of 100 billion euros, estimates actual UK market prices to have risen up to 23 percent so far this year, however, due to huge investor demand.

"At the moment investor demand is huge, but because the occupier side continues to deteriorate, the underlying fundamentals for property performance actually aren't there," Aitchison said on the sidelines of an ING Real Estate seminar.

He remains bullish about the long-term prospects for UK commercial property and sees the next 3-5 years as a positive time for UK assets as the occupier market recovers and rents start rising in 2011.

TREADING WITH CAUTION