Market mood: The region’s property fraternity give their opinions on the state of the industry now and over the next six months. By Nadia Elghamry
If you need proof that the recession has spread to the most easterly reaches of the UK, then look no further than the Bistro at Hotel du Vin in Cambridge. At any lunchtime you will find agents and developers waving their two-meals-for-£29 vouchers and asking for the bill to be split.
This scene is unlikely to change any time soon, as most property pundits across East Anglia believe the region is in the full grip of a recession.
Opinion gauged by our survey, completed by 71 agents, developers, bankers, investors and local authorities, is split evenly between there being no improvement and, more worryingly, a further deterioration over the next six months. That is mirrored by expectations that there will be more redundancies, with more than one-third thinking there will be further large-scale cuts.
Business profitability, reducing the cost of operations and improving cash flow all, understandably, feature high on their list of woes. Corporate social responsibility and sustainability have nearly dropped off the agenda.
Tenant defaults
In the occupier market, confidence has plummeted. Tenant defaults have started to creep in and, over the next six months, a deterioration is expected in almost all sectors – at odds with other parts of the UK, where retail is expected to take the brunt of falls.
The investment market has yet to find a floor – up to a 15% drop in capital values has already been seen – and around half predict further falls of between 5% and 10%.
Some local businesses need to refinance. Of those, nearly one-third are worried about doing so.
Many developers will only develop with a prelet, but where the cash will come from even then is uncertain. In our survey, respondents saw the lack of development funding as the biggest threat to the region’s property market, with nearly one-half saying it is very hard to secure.
Almost all expect developers to breach their covenants as rents, already down by 5-10%, are expected to fall by another 5%.
Estates Gazette East Anglia sentiment survey Q1 2009
The majority of respondents expect every sector of the market to deteriorate over the next six months
