Commercial property sector 'still feeling after effects of recession'

24 December 2009

Written by Simon Whittaker

The British Property Federation has said that the commercial property sector is still feeling the after effects of the recession.

Director of policy for real estate at the organisation Ian Fletcher said: "The commercial property sector was late at going into the recession but later coming out of it."

He added that retail occupiers are now beginning to go out of business, which is just starting to impact on the sector. However such effects are still transpiring, Mr Fletcher noted.

Comments from the federation follow findings by the Bank of England that those who borrow money to finance commercial property could be more likely to default on their debts.

Published on December 18th, the Financial Stability Report stated that a fall in demand and decline in rental values may mean that borrowers cannot afford to pay back loans.

Those who use property for collateral, such as commercial property companies, may find that banks are forced to sell their assets thanks to downward pressure on values, it claimed.

Mr Fletcher said these findings were very "pertinent" because the commercial property sector is "exposed" to banks calling in loans.

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