April 2010
UK Commercial Property Market - Where to From Here?
Whilst the rise of the UK retail, office and industrial market was long and for the most part steady, the fall from 2007 was both sharp (over 40%) and in comparison to the rise, short. In late 2007 and early 2008 the economic climate created downward pressure and initially modest falls this was hugely accelerated by the almost total collapse in bank finance in 2008. Valuations were marked down dramatically as the banks reviewed their loan books and valuers felt the pressure. We are seeing income yields that have not been seen for many years in a market where there is a shortage of good quality property coming to the market. This allied with the relative strength of the Euro and the US Dollar has made the UK an attractive investment market particularly to Middle and Far Eastern investors.
The government bail out of most of the major UK banks has meant an easing of the credit and lending markets, but of course unsurprisingly nowhere near to the levels that led up to the collapse in late 2008. Sensible finance is available for the right deals and we have seen 60-70% loan to value offers return. Importantly the squeeze on the cost of medium term funds has abated and interest rates have now come down to levels that make financing a commercial proposition since their peak in late 2008 and early 2009.
Whilst the economic future is far more stable and appears to be on track for a sustained recovery in the months to come September 2009 may well be seen as the bottom of the downward market cycle. This inevitably means that there are excellent opportunities for buyers who are able to invest for the longer term, find the right properties and secure the finance. These are services Pegasus offer directly and through associates
For further details, please contact Richard Muddimer : r.muddimer@pegasus-fs.com