Insurance News Archive

Commercial property troubles 'could extend to other sectors'

Loan covenants have come under pressure in the UK and could determine whether current economic troubles will extend into other markets, it is claimed.

Reuters reports that there has been an 18 per cent drop in UK commercial property values since last June and suggests this trend could spread to other sectors which have not yet reflected the credit crunch.

Joe Valente, who is soon to become head of property management and strategy and Allianz Real Estate in Munich, said the longer the current economic climate exists "the greater the dangers of contagion to markets which hitherto have seen no impact".

He added to the news provider: "Does it make sense for (property) yields in London to be at 5.5 per cent, the same as in Bucharest?"

It was revealed recently that British Land, the biggest commercial property developer in London, recorded a loss of £1.56 billion last year, with its overall property prices value falling from £14 billion to £10.5 billion in 2007.

20 Jun 2008