An influential investment banker has warned that commercial property prices are set to fall due to the global credit crunch.
Speaking at the annual EPRA Real Estate conference in Athens, the head of real estate at Rothschild, Alex Midgen, said that increasing prices on debt structures “will have to have a consequential effect on real estate pricing”.
Midgen was addressing more than 500 delegates, including Francis Salway of Land Securities and Ian Coull of SEGRO.
He also warned that banks were cracking down on lending to any projects perceived as risky.
“Only the best schemes with the best fundamentals will get financed. You will not be carried by the market anymore,” he said.
“Banks will want more equity and lower risk.”
Midgen said that, as a result, there would also be less speculative development.
? DTZ also warned that turmoil in the financial markets was significantly hitting investment demand for commercial property in the UK as it updated on progress at its AGM.
Focusing on the recent volatility in the financial markets, chairman Tim Melville-Ross said the effect was more marked in some sectors than others.
In the UK, he said, the expected easing of investment demand had deepened since the credit turmoil of the past few weeks.
Banks also reluctant, p55
