Monday May 12, 07:35 PM
Ritblat sees property recovery delayed
By Daniel Thomas, Property Correspondent
Sir John Ritblat, one of the grandees of the UK property sector, has changed his view and has warned that the property investment market would not see any recovery until next year at the earliest. The former British Land (LSE: BLND.L
- news) boss on Monday said that the lack of bank funding and a deterioration in economic conditions would continue to depress the property market "for at least the remainder of 2008".The sector is already in the throes of a cyclical downturn. That has seen the all-property total return on an annual basis hit a record low of -10.7 per cent in March, according to benchmark index IPD. There are now worries that the downturn in the economy will have a knock-on effect. That will hit demand for commercial space from occupiers with a consequent impact on rental income and property values. Sir John had previously predicted some recovery in the second half of this year. But on Monday he said "the continuing reluctance of banks to lend, together with a deteriorating economic environment, has led us to revise our original expectation of an upturn in activity towards the end of the year." He added that "we now expect investment activity in the UK to remain at its current depressed level for at least the remainder of 2008". Occupier markets, he said, while more robust than the investment market, are beginning to reflect the decline in economic growth with a number of occupiers postponing plans to take on additional space. In a trading update for Colliers CRE (LSE: COL.L - news) , the commercial real estate consultancy that he chairs, Sir John said that the company had already taken steps to cut costs. Those cuts are based on its view that 2008 would be a problematic year. He said that the company's professional services remained in high demand, but warned that they could not fully compensate for the low levels of activity in the investment market and the effect of the economic slowdown on occupiers. He said that these would likely lead to a reduction in expected fee revenues for the year. Shares in the company closed the day down 13p at 61½p. Revenue declined slightly in the first quarter of 2008 to £15.9m, from £16.3m in 2007. Colliers has completed the acquisition of Godfrey Vaughan, the niche agency, which Sir John said should have an immediate positive impact on the group.
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