Credit crunch ''could help market'' - commercial mortgages

24 September 2007

The ongoing effects of the credit crunch could, contrary to popular belief, have a positive effect for firms with commercial mortgages, one company has suggested.

CB Richard Ellis has said that a fall in the number of new offices being built in London could help maintain the healthy market currently being seen in the capital.

According to Reuters, the firm has downgraded its forecasts and now expects 2.5 million, as opposed to 4.5 million, square feet of office space to be built per year in the city between 2009 and 2011 due to a lack of available funding.

"[The reluctance to lend] will reduce the risk, which was beginning to appear in the pipeline, of medium-term oversupply and enhances the prospects for rental stability," CBRE head of UK research Peter Damesick told the news agency.

"So we''ll probably see slower rental growth in the short-term but less risk of a rental downturn in the medium term," Mr Damesick added.

Earlier this year Knight Frank reported that office rents in London were rising at their highest level for seven years.