Wednesday, 18 March 2009

The silent property crash

(Click on the chart for a sharper image)

The commercial property crash is rarely mentioned, but it is just as vicious as the one currently raging in the residential market. UK Banks are dangerously exposed to commercial real estate. Declining rental values and property prices threaten to weaken already battered bank balance sheets.

Prices are already down over 40 percent since the peak in early 2007. They could fall further and easily outstrip the fall in residential prices.

9 comments:

Mark Wadsworth said...

Yup. Prices are back to circa 2000 levels. It'll be time to start buying REITS shares in a year or two.

Anonymous said...

I wonder how Alan Sugar feels about this now he's a property man?

Anonymous said...

Anon 16:05

i betca he wants to be back running those tossers in north london.

Anonymous said...

As future trends guy Gereld Celente says: "when Gap is gone, when Pottery Barn is gone, when Whittards are gone, who is going to rent this commercial real estate: nobody!. Nobody is going to rent this stuff. It will sit empty."

It is the tsunami that is going to hit all the commerical real estate beach bunnies late spring 2009. And they will just stand there like they did back in 2004, going 'wow, did all the water go away? Is that a wave coming?..."

DBC Reed said...

Seeing as how a lot of people with tracker mortgages are hundreds of pounds per month better off with lower interest rates and High Street rents are lowish (not pubs,of course) you would think that there would be a big upturn in retail -but there is n't.

Anonymous said...

Wow! And I wonder what that would look like deflated by the RPI :) B. in C.

Anonymous said...

The problem is that, while people are enjoying an interest payment holiday on their existing mortgages, it is in the climate of declining asset values. So, you see your interest payment drop, but then you also see the value of your home drop a lot. In that context, few people are going to feel confident enough to run out and buy some commercial property, or start a business. Look at the US: on Madison Avenue (home of the mad men) in New York, 50% of commerical is sitting empty.

Oceanfront Myrtle Beach Condo said...

Its really strange that it deflated rapidly

look said...
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