Commercial Property Slump In UK Hits Nama
The National Asset Management Agency’s efforts to sell off British properties outside London by the end of 2013 has been complicated by news that the UK’s commercial property market is in its worst downturn since records began, the Irish Times reported. The value of shops, offices and warehouses is 31 per cent below the September 2007 peak, according to a survey by Investment Property Databank (IPD), while prices fell by a further 0.7 per cent in the first three months of this year. Office prices in the north-west are down by 46.3 per cent from the level they were at five years ago, while Welsh industrial buildings are down by the same amount. In the south-west, office prices have fallen by 45.2 per cent since 2007. The best performing sector outside London is industrial estates in Scotland, where prices are down 27.4 per cent on 2007. In the south-east, except London, prices are nearly back to the levels they were at before the crisis. “The UK has fallen back into technical recession largely due to a lack of business demand and a construction slump,” said IPD’s director of research Malcolm Frodsham. “As values continue to decline, investors are unlikely to want to develop, which will lead to further pain.” The decline is twice as severe as it was in the late-1980s recession. Then, prices took over five years to come back within 15 percentage points of their pre-crash levels, said IPD: “[This] represents the worst downturn since [records began in] 1971.” The only district where prices for retail are actually higher than they were before the 2007 crisis is in London’s West End, up 4 per cent on 2007; though prices for offices in the same area are still 16 per cent below the 2007 peak. The difficult environment is reflected by the fact that 2012 will be the first year for 30 years in which no new major shopping centres will open, while the number of centres under construction have dropped. Read more.