Job cuts lower commercial property values


Job cuts by the banks are forcing commercial property values lower, real estate group Hammerson has said.

It revealed redundancies sparked by the global credit crunch are also lowering rents in the City of London.

It noted: "The banking sector has remained cautious about advancing new loans, particularly to the commercial real estate sector."

This lack of funding is also affecting new developments as builders are struggling to raise cash.

Furthermore, by delaying closure on some commercial property debts, banks are playing what news agency Reuters described as, ‘real estate roulette’.

Commercial property values are falling and as some loans are tied to the value of these commercial property assets, they look less secure.

Forecasts from financial services firm, JPMorgan, carried by Reuters warned: "The bank might be keen to avoid selling distressed property but they also need to avoid selling assets that aren’t just distressed but also vacant."