Are There Conflicts of Interest in Commercial Real Estate?


There is a big debate currently taking place in the property sector, with a simple question being asked; “Are conflicts of interests within the commercial real estate industry negatively affecting UK businesses”?

You will hear differing views, depending on who you speak to.

Solicitors, lawyers, insurance and financial companies cannot understand how under regulated the commercial property sector is with this issue.  These industries have a specific legislation that is upheld, with detailed consequences if conflict policies are broken.

If a property advisor can be involved, and also paid, in acting on behalf of two competing parties in the same property transaction, then questions should be raised, shouldn’t theTaking the strainy?

DeVono Cresa have therefore decided to engage with the London business community and ask them what they thought about this issue. A simple 6 point questionnaire was circulated to 16,000 commercial tenants and the results make interesting reading;

• Do you think it is fair for a commercial property agent to be advising both the landlord and the tenant on the same property transaction?

94.81% said No

• When you chose a property firm to represent you, did you consider they might be conflicted as they represent landlords as well as tenants?

65.79% said Yes

• When appointing a property advisor, whose majority of work is advising landlords, would you be concerned about them also advising you (the occupier)?

76.62% said Yes

• Have you ever received any guidance from a property advisor in regards to conflicts of interest within commercial property?

72.37% said No

• Should conflicts of interest within the commercial property industry be governed better so they don’t occur ?

97.37% said Yes

• Are you aware of any rules or guidance against conflicts of interest working more effectively in other sectors (such as Finance and Law)?

61.84% said No

With an independent study / white paper on this issue soon to be published, this is not something that property professionals can ignore any further. The property industry is in desperate need of some new codes of conduct.

What are your thoughts?