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Ernst & Young warns of 'unsustainable' commercial property market
The current upturn in the commercial property market may not be sustainable, it has been warned.
According to the Ernst & Young ITEM Club, the end of quantitative easing (QE) and the lack of banks able to refinance loans may result in an end to the growth that has been seen in the sector recently.
The firm noted that the Bank of England's QE programme has been helping to fund transactions in the business property market, meaning this source of finance will dry up once the Bank ends the initiative.
And the fact that there has been little to suggest that the trend of falling rents and rising vacancy rates is reversing could cause the recovery to become destabilised easily, the company said.
"Welcome though the bounce of activity has been, its sustainability is far from certain," remarked Ernst & Young's Dean Hodcroft, adding that the upturn has largely been based on the low prices created by the falls of the past two years.
The findings are in contrast to a new report from Jones Lang LaSalle, which concluded that London is leading the way in the recovery of the European commercial property sector.
According to the Ernst & Young ITEM Club, the end of quantitative easing (QE) and the lack of banks able to refinance loans may result in an end to the growth that has been seen in the sector recently.
The firm noted that the Bank of England's QE programme has been helping to fund transactions in the business property market, meaning this source of finance will dry up once the Bank ends the initiative.
And the fact that there has been little to suggest that the trend of falling rents and rising vacancy rates is reversing could cause the recovery to become destabilised easily, the company said.
"Welcome though the bounce of activity has been, its sustainability is far from certain," remarked Ernst & Young's Dean Hodcroft, adding that the upturn has largely been based on the low prices created by the falls of the past two years.
The findings are in contrast to a new report from Jones Lang LaSalle, which concluded that London is leading the way in the recovery of the European commercial property sector.
Mon, 1st Feb 2010