Blanchard Consultancy – the independent construction consultant

The value of UK commercial property will have more than halved by the end of the decade as rental demand continues to wane, according to a report out today.

The Royal Institution of Chartered Surveyors (RICS) predicts that the commercial property market will see a fall of at least 16% in capital values in 2009 and up to 10% in 2010. Capital values have already fallen 25% since the onset of the credit crunch in June 2007. This would mean steeper falls than in the recessions of the 1970s and early 1990s.

Oliver Gilmartin, senior economist at RICS, said: "We are only halfway through the price correction in the commercial property market, with values set to fall through 2009 and 2010 as rental declines gather pace. Transaction activity is set to rise, however, as more sellers become willing to accept lower bid prices."

The report says that rising defaults will prevent a near-term recovery, and the investment market will be sluggish for some time to come.

Article continues at Guardian online

Labels: commercial mortgages, commercial property prices, RICS

The balance of surveyors reporting demand for commercial property in Q3 has fallen at the fastest pace in a decade, says RICS’ Commercial Property Survey published today (3 November 2008).

52% more Chartered Surveyors reported a fall than a rise in demand compared to 50% in Q2 2008.

All sectors remain firmly in negative territory for the fourth consecutive quarter with the industrial and office sectors dropping to the lowest balance in the survey’s history.

The worst hit area continues to be the retail sector with 59% more Chartered Surveyors reporting a fall than a rise in retail demand, a slight improvement from 63% in Q1.

The continuing financial turmoil and a slowing housing market is clearly weighing upon both retailer and consumer confidence.

The net balance of surveyors reporting new occupier enquiries in Q3 declined at the fastest pace in the survey’s history.

Read more at the RICS newsroom

Labels: commercial mortgages, credit crunch, property prices, RICS

Banks are taking a tougher line with commercial property investors and could foreclose on underperforming loans in the sector in the next few months, according to research from Drivers Jonas, the surveying firm.

Property investors that are unable to bring new equity into their investments, to bring loan-to-value ratios back into line, may find themselves in difficulties, the research suggests.

"There seems an inevitability that situations which are deemed to be "underwater" for the long-term could end up with lenders foreclosing," Drivers Jonas says in its summer investment trends report.

"It remains the case that, if possible, banks are using LTV (loan-to-value) breaches to renegotiate loan terms but they will not hesitate to act if they feel that the loan is under threat," the report continues.

It says that banks will become more vocal in the next few months as the risk of tenants failing to pay their rents rises, along with the continuing pressure of capital write-downs across the banking sector.

Read more at Times Online

Labels: commercial mortgages, property prices, UK Interest rates