Hopes of commercial property buyers in UK dwindle

Who can be the worst sufferers of any economic recession? Well, the list is quite huge and does comprise lots of players including shareholders, business persons, agents, ordinary home buyers and also the commercial property buyers. What is the present condition of these principal players in any vibrant economy? Well, they are not only appalled but their conditions (along with the market) are also deteriorating steadily thanks to the ongoing economic meltdown. But, even among them, the conditions of commercial property buyers seem to be worst. This situation is more or less same throughout the globe but a few recent studies in the sphere of UK reveal how bad it can be.

This study was done by De Montfort University’s Commercial Property Lending Review, which is known as a strategic study of UK commercial mortgage markets. According to the findings of the report, the total value of new loans obtained by commercial property buyers contracted to 24.6 billion pounds in the first half of 2008 which accounts to less than one third of the total loans issued in the previous year of 2007. The study also indicated a severe reduction in the number of active lenders while the second year of the credit crunch comes to a promising stage.

What is the total valuation of the property that the study surveyed? The report deals with a 226.7 billion pounds total property (commercial and social housing) loan book but depicted that more than a quarter of 58 banks (that were surveyed) made out not a single loan introductions in the first half of 2008. Nevertheless, 74 percent of all lending in the period were accepted by only 12 banks.

This gloomy scenario has been described by the report in the following words, “A weakening economy resulting in the failure of an increasing number of business tenants, further declines in capital values… will make it far more difficult for lending organisations to maintain or refinance existing loan portfolios.”