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Commercial Outlook 2010
02/02/10  The availability of bank funding has been an issue for businesses for more than 18 months now. Although we have always had substantial funds to lend at Bridging Finance Limited the scarcity of refinancing options has often been an issue for clients. Although the overall accessibility of credit still remains a cause for concern BoE reports indicate that the situation continued to improve in Q4 2009, with further improvements anticipated during the first few months of this year. An additional cause for optimism is that almost all the signs currently emerging from the commercial sector appear positive. Reports from the major retailers indicate that it was a good Christmas on the high street and a recently published index for the manufacturing sector (the CIPS/Markit PMI) shows that activity in December rose at the fastest rate since the beginning of the recession, helped no doubt by a strong export market. The service sector has also seen improvements since Q3 2009, and the combination of these various factors bodes well for commercial property transactions and lettings in the coming months. We already know that foreign investors have been attracted to UK commercial property, and with the IPD reporting a return to growth in capital values we are also beginning to see an increase in commercial development activity, with private developers leading the charge. Of course, in addition to the possibility of recent price rises triggering an increase in supply, there are also a number of macroeconomic factors that could act as a brake on the improvements that are currently being experienced. Unemployment continues to rise and interest rates are likely to follow suit before the end of the year. We will also have to contend with the end of economic stimuli, the upheaval of a general election and the possibility of tax rises aimed at reigning over in the public debt. Any combination of the elements outlined above may well be sufficient to cause a stall in the market midway through the year, but although economic recovery may be slower in the UK than in the USA and some other Eurozone countries, we can at least take comfort in the fact that if predictions of GDP growth in 2010 are correct, the commercial property market will naturally follow suit. print page
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