Some banks are calling in commercial property loans and forcing investors to sell, the Observer has reported.
The paper quoted an unnamed head of a UK property company saying: “I’m aware there have been a few more instances of banks forcing property companies to sell.”
Falling capitol values have left some investors out of pocket and in the worse case, unable to repay their debts.
Because most purchases are made with small deposits, in some instances buyers are left with property worth less than they borrowed.
According to the paper the crunch is about to enter a “second leg” in which lenders force ‘fire sales’ of offices, shopping centres and industrial units.
Falling prices, however, attract new buyers to the market – especially in London, which continues to draw investors and firms to new offices and opportunities.