Fearful Friday
It’s Friday, so it must be time for a dose of caution. As the Euro and banking shares take fright at the prospect of the Greek crisis spreading elsewhere, MoneyWeek says it is wary of piling back into commercial property despite what DTZ and Knight Frank each had to say this week.
In a cheerful piece entitled “The worst could be yet to come”, MoneyWeek says that despite data showing strong inflows into UK commercial property funds, there are plenty of reasons to worry. Concerns about the Euro, the possibility of another banking crisis amid the prospect of deepening losses on property loans, and the expectations of deep spending cuts in the UK all point to caution rather than optimism, the magazine says.
Giles Barrie over at Property Week is also downbeat, saying that the property sector’s champagne and limousines are still firmly locked away. He declares that apart from central London offices, supermarkets and the best open A1 retail parks, there is little argument for rental growth. And although rents are falling, many companies are not in the mood or condition to move, he argues.
“In fact, in some cities outside the south-east, the situation is so bad that perfectly respectable properties could well be knocked down for changes of use,” Barrie says – a bank that lent £16m towards the purchase of a £19m property in Birmingham, Manchester or Leeds – and which now owns it – might well now demolish it to sell for £3m as a residential site, he warns.
