The UK commercial property market looks to be heading towards calmer waters and it would appear, for the time being at least, there is an end to the boom and bust culture within the commercial property market.
The Birmingham Post, has recently reported of the UK Commercial Property Lending Market Survey, created by Bill Maxted of De Montfort University.
The report stated that last year, UK commercial property debt fell for the first time in over a decade. The survey said, ‘from a base of £55 billion in 1999, UK outstanding lending had grown by 18 per cent every year until 2007.’ The report went on to state that during the first part of the recession, growth in commercial property debt had continued, albeit at a slower rate. However, 2010 saw a reduction in commercial property debt of 9.4 per cent.
The results contained in the survey show that 67 per cent of respondent lenders had decreased the value of their outstanding debtand just 31 per cent had registered an increase; this increase is believed to have been driven by foreign banks.
This reduction in debt is not solely down to commercial property landlords finding themselves in an improved financial position; it is thought that it is also a result of banks demanding the repayment of loans. David Smith of Strata Real Estate, said: ‘This reduction came from repayments that were occurring naturally but also from forced repayments.’
Despite the fact that a major reason for the reduction of commercial property debt is the banks calling in their loans, the fact that there is a reduction must be viewed as positive news.
Mr Maxted concluded his review by saying that there was definitely good news on the horizon. ‘We are four years into a recession and financial organisations are saying it could take another five years to sort out their loan books – the light is at the end of the tunnel, but we can’t say yet how long that tunnel is.’
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