Commercial property values fell 4.3% in December as the rapid drop in prices continued.

According to CB Richard Ellis’s monthly index for December, the fall in values accelerated slightly in December after dropping 4.1% in November. Values have now fallen 11.9% since the onset of the credit crunch, and 10.3% in the fourth quarter alone. Over the whole of 2007 they dropped just shy of 10%.

Total returns in December were -3.9%, increasing the negative return for the whole year to -5.2%.

The figures are significant, as CBRE values a significant portion of the properties in the Investment Property Databank indices.

The IPD monthly index for December is due to , which releases its monthly figures on Tuesday.

CBRE warned that worse might come. ‘It points to a rather challenging start to the year with the prospect of further outward yield adjustments compounded by a weaker occupier outlook, which would translate into more negative monthly returns in the near term,’ said Michael Brodtman, executive director and head of the valuation advisory team at CBRE.

But Brodtman said that the speed with which values had already fallen might mean that 2008 would be better than predicted, with property becoming an attractive asset class for investors sooner rather than later.

‘But the degree of shift that has occurred and the aggressiveness in the final quarter of 2007 may suggest that the initial projections of a large adjustment in 2008 may not be as severe as previously thought,’ he said.

‘Considering the remarkably quick adjustment in pricing, with values already down by almost 12% since mid-2007, and with the CBRE Index now showing an all-property equivalent yield of 6.4% against 10-year gilts offering less than 4.5%, it may not be long before more investors see value in the sector.’