The UK economy is extremely unlikely to go into recession, according to Dr Angus McIntosh, head of research at Birmingham property firm King Sturge.
With the underlying dynamics of the global economy still going strong, Dr McIntosh believes that the UK may have already gone through the worst of the commercial property price corrections and that by the middle of this year some stability should be restored.
This will also mean that occupiers will continue to seek accommodation as long as economic growth continues at one to two per cent.
Speaking at the King Sturge annual Midlands Property Predictions event, Dr McIntosh said that while the West Midlands share of the national economy continues to decline, Birmingham is expected to be one of the UK's more dynamic large urban centres over the next decade.
His view was backed up by office agency partner, Jonathan Carmalt, who predicted that 2008 may well be a record year for office take-up levels in Birmingham, with long-awaited new-build city centre office developments progressing towards completion and agents now being in a position to satisfy years of under-supply.
In the central Birmingham office market, Mr Carmalt also predicted that Edgbaston is likely to step back into the limelight. Calthorpe House, as the first speculative new-build offices in the area for two decades, is a prime example of increased confidence in the area.
"Edgbaston will really come into its own and the likes of Capital and Counties' fifty4 Hagley Road is well placed to emulate the success of Fort Dunlop in 2008," he said. "It has undergone an extensive refurbishment and provides probably the best specification of offices seen in Edgbaston for some time."
The national economic and property outlook for 2008 will provide mixed opportunities for both developers and investors, added Dr McIntosh.
"The days of the 'Goldilocks economy' is dead. The geo-political and climate change uncertainties will result in mild stagflation, with higher inflation, higher interest rates and slower economic growth.
"With capital values having risen by 100 per cent since 1991, there is a 50:50 chance they will fall by over 20 per cent from their peak in mid-2007 to mid-2008.
"The faster they fall the quicker the market will return to normal."
He also said all commercial occupiers and investors would come to realise that Energy Performance Certificates and tougher build regulations will significantly raise the cost of new construction and refurbishment. This will reduce new supply, which is good for the value of standing property investments.
The introduction of the Uniform Business Rates tax on empty buildings also poses bad news for developers, but good news for investors. It will slow down new supply and inflate the existing investment values. The green agenda will also have an impact on the commercial property market in a number of ways.
"Achieving green premiums won't mean, however, that higher rents can be charged in the short term," said Mr Carmalt. "The direct financial benefits are likely to be felt in the form of higher investment values with stronger growth and reduced taxes. Lower grades of property will also be viewed as discountable."