Although everyone (me included) be looking back on 2009 with their blogs I also wondered what 2010 might bring.
Will commercial property values hold up in 2010
In simple terms I am not sure that much is going to change; indeed most of my fellow competitor surveyors have suggested that their budgets remain as 2009.
Certainly the banking situation seems to be fairly static. The known fact is that most people with commercial property loans are probably in technical breach of their banking covenants – usually the ‘loan to value’ test (“LTV”). This is principally because the value of the property has dropped – even when the loan remains the same. But the Banks have been turning a blind eye to this – provided interest is being paid. Of course the situation may change as business and cashflow gets tougher. If interest payments are missed there may be a different view taken and we could have repossession taking place – to date this has been limited.
In 2007 there were estimated to be 400 loans defaulted (worth £758m) – in 2008 this had increased to 3000 loans (£3.1bn). But at the end of 2008 it was estimated that there was between £38-50bn of property in negative equity! Total debt is around £225bn.
But the big unknown for 2010 is the General Election – likely to be in early May. I think the Tories will win; but I am not so sure that it will be easy. But when they get into Downing Street I suspect the cupboard may well be somewhat bare. If this is the case, they may as well get all of the bad news out quickly, so that they can blame Brown and have a chance of recovery before the next election? If this is the case, it could be the Public sector that gets hit quite hard. The other effect may be that people will sit on their hands – waiting to see what happens.
I was in Leeds in November and there was a glimmer of good news at the Granary Wharf development by ISIS. They were selling properties – and quite number. This really was a sign that the tends were being bucked. And looking at the lack of shops ‘in sale’ over the least few weeks (and the state of car parks in towns) perhaps the retailers will have a better Christmas… November sales figures were 3.1% higher than the previous November. Interestingly the retailers will start their online sales earlier this year apparently!
I guess it will be the usual tale – we won’t really know until this time next year! But – fingers crossed!
Happy Christmas!
