Tuesday May 13, 04:00 PM
UK commercial property in doldrums
By Daniel Thomas, Property Correspondent
Commercial property development in the UK has sunk to its lowest level in five years owing to the crisis in financing new building work and doubts over the outlook for the occupier market. About one-third of commercial property developers reported
a fall in activity in April, compared with just 12 per cent that indicated that there had been a rise, according to a report by Savills (LSE: SVS.L - news) , the property consultancy.The -20.8 per cent margin in April represented the largest monthly drop since the data were first collected in March 2003, and a marked fall from the -16.4 per cent margin reported in March. "The steady stream of bad news relating to the effects of the credit squeeze on the wider economy is clearly impacting on developers' confidence," said Mat Oakley, head of Savills' commercial research. "Until the debt market eases, and uncertainty about tenant demand relaxes, we expect developers to remain cautious." Developers told Savills a number of factors were depressing sentiment, including prospects for the UK economy, the credit squeeze and weaker occupier market demand. Regional developers noted a greater slowdown - 28 per cent more reported a fall than a rise in activity than those in London, where the margin was 18.4 per cent, and the south-east, at 12.7 per cent. This comes in spite of the fact that many observers worry that the banking and financial services sectors could be hardest hit during an economic slowdown, although it is expected that the retail market will also bear the brunt of any consumer spending curtailment. Office developers noted the largest slump, with 32.9 per cent more reporting a fall in activity than a rise. Almost one-third more respondents were pessimistic than optimistic about their three-month outlook, compared with -19.6 per cent in March, with office developers again worst affected. Savills said respondents were highly pessimistic about the three-month outlook for all three sectors across offices, industrial and retail and leisure.
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