Delek Global Real Estate has pulled out of a £1.4bn deal to buy Swiss department store Jelmoli’s property portfolio because of “changes in, and continuing uncertainty of, the global commercial property market”.
The announcement came on the day the Bank of England warned of growing risks to the commercial property market in its half-yearly Financial Stability Report. It also warned over a potential oversupply in the office market leading to further pressure on prices. Great Portland Estates, was optimistic, however and said occupier demand remained strong, particularly in London. Toy Courtauld, chief executive, said it was not as simple as the Bank of England portrayed it.
JP Morgan lowered its forecasts for the sector. It estimated valuations could drop 12%-15% in the next year. However, it outlined eight reasons why British Land shares, down 0.3% to £10.30, were attractive. Professional advisers are recommending investors avoid commercial property funds and sell out, where appropriate.
26/10/07 Financial Times 3, 42 Times 48, 50, 55
