News

Lowest Commercial Development Since Survey Began

There has been a sharp decline in UK commercial development according to the Savill’s latest Total Commercial Development Activity Index. The figure stands at 16.4% down 6% from February. This is the lowest figure since the survey began in March 2003. 28% of those surveyed reported a fall in development compared to 12% that showed a rise.

March’s lower figures were because of the tighter bank lending conditions, weaker global economy and also lowered client demand. Work on public sector projects had fallen at the fastest rate since the survey began. Private sector developments had also declined.

Indications were again showing negative territory for the sixth consecutive month. Developers were putting the present position down to weak market demand the rising cost of borrowing.

Developers seemed to think that for the next three months there would be a negative outlook for office, retail, leisure, industrial and warehouse projects.

Commercial Lending Sector Suffering

The commercial lending sector is having the same problems as the sub-prime sector. Commercial First suspended new lending last month and Interbay reduced business by lowering its loan to value to 70% of a minimum £100,000 loan.

Base Commercial Mortgages have withdrawn all facilities for adverse lending and are not accepting any new broker registrations so as to control the volume of business. The will accept applications from clean credit history borrowers and will consider adverse credit histories that can be explained.

They stated that they have good funding and want to keep their credit quality and ensure their mortgage assets remain attractive to investors. They do not want to become a company that is chosen as a lender of last resort.

Commercial land values across London are falling and West End prices are possibly to drop to around £900 per square metre as opposed to last summer’s price of £1250.