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This is no surprise. The commercial property sector started to decline well before the private property sector, and as more and more companies go bust over the next 18 months, demand for this type of property will 'fall off a cliff'.
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1,600 property firms face ruin
http://business.timesonline.co.uk/to...cle5780336.ece
1,600 property firms face ruin
A LEADING group of business-recovery experts has warned that insolvencies in the commercial-property market will surge this year.
As many as 1,600 UK property firms could go bust this year as the country’s economic woes mount, Begbies Traynor estimates.
The news comes as several of Britain’s biggest landlords turn to shareholders to raise cash, including Land Securities and Hammerson, which have seen the values of their portfolios plummet.
Begbies Traynor’s “Red Flag” early-warning system, which detects businesses in financial difficulty, has identified 304 UK property firms at severe risk of becoming insolvent because of the critical financial problems they face.
This represents a 65% escalation from 185 companies with critical problems in the third quarter of 2008 and a 38% jump from 221 in the fourth quarter.
The troubled firms, which are mainly in the small to mid-size category, have about £1.1 billion of assets between them, an average of £3.6m per distressed company.
Nick Hood, senior London partner at Begbies Traynor, said: “We’re seeing a build-up of problems as the real economy in which tenants operate continues to unravel. The only upside has been the fall in interest costs. However, this offers little relief to landlords dealing with escalating tenant defaults and unprecedented difficulty in raising or preserving business funding.”
Last week, leading property adviser CB Richard Ellis published bleak figures on commercial-property values, revealing that prices fell by a further 3.5% in January, on the back of a 27% fall in 2008.
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In case anything thinks property values are going to start increasing soon.
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