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Slow recovery predicted for commercial property

The commercial property market is likely to face a difficult period of recovery as it tries to obtain investment finance and refinance loans, but low interest rates, a shortage of available prime space and tightening margins for investment debt will present genuine opportunities, particularly in London and the South East.

These are the conclusions from an independent white paper from space and infrastructure solutions provider Port@l, published in May.  The paper has been written by freelance researcher Helen Hide-Wright and aims to help finance directors understand the current and future financial issues affecting the commercial property sector. The research paper, titled Finance – Property & Corporate Real Estate, looks at a wide range of topics including investment, funding, valuation and managing debt.

The paper also looks in detail at the role of the banks, access to funding, the pressure on European banks, debt within the property sector, the effect of Government spending cuts, and the Asset Protection Scheme.

John Gotley, Port@l’s Managing Director commented, “The last three years have seen a dramatic shift in the way finance professionals view property... values have plummeted by almost 45% since 2007 and changes in Empty Property Tax mean that portfolios containing a number of moth-balled buildings are becoming more visible on corporate balance sheets and P&L forecasts.

“To help clarify the situation, we have commissioned this paper to provide an assessment of where finance & corporate real estate sits today and how this may change as the economy slowly returns to growth,” he says.

Despite Port@l’s forecast, around 10% more chartered surveyors reported a rise in demand for commercial space in the first quarter of 2011 rather than a fall, according to the latest figures from the RICS. This represents an increase of 8% of those surveyed seeing increased demand. However, this slight improvement in the market did not translate into increased rental expectations as any increase is being offset by the greater availability of commercial space.

For more information and a copy of the P@rtal paper, go to www.portal-centres.com or to download the RICS commercial market survey, go to www.rics.org

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