Insurance News Archive

Global credit crisis hits commercial property

Commercial property in the UK has reportedly been unable to escape the global credit crunch prompted by the collapse of the sub-prime sector in the US.

According to the head of development firm Segro, the sector has started to see effects such as falling demand from investors for new properties, as well as a slowdown in the rise of rental yields.

The firm's office and warehouse developer's chief executive Ian Coull said yields have failed to keep up with the rising prices of property, which may suggest a peak has been reached in the market.

"The investment market has cooled quite a bit because of what his happening globally in the credit markets," he told the London Evening Standard.

But a cooling off does not equal a crash, he was quick to emphasise, adding: "In commercial real estate the prices are not falling but we are seeing more stability and prices are not rising in the way they have done."

However, one industry analyst group has claimed that those very prices are threatening to fall.

Capital Economics suggested that declining demand for properties which were not 'trophy buildings' would prices outside major financial or commercial areas fall by 12 per cent over the next five years.

29 Aug 2007