While many property professionals are still uncertain as to the longer-term effect of the stock market crash on property, Winter & Co have no hesitation about predicting a crisis.
“The events of the last two weeks will bring about a property crisis comparable with that of 1974,” the agents say in a 14-page report, The New Property Crisis.
Their crystal-ball gazing makes fairly hair-raising reading: they believe that demand and rents will fall, and that banks will require many companies to cut their borrowings or provide cash advances as collateral.
“In order to do this, many companies will be forced to try to realise the value of their assets,” say Winter & Co, pointing out that, in the depressed market, sales will be more difficult.
Winter & Co are also predicting a “crisis in consumer confidence” which will have a serious knock-on effect for both industry and the service sector. We are likely to be into the next decade before any substantial improvement takes place,” the report says.
Empirical evidence for these conclusions is not revealed, but the report does include some sketchy figures on take-up and availability of office space in the West End of London over the last year.
On their reading of this market, Winter & Co expect that between 30% and 40% of the last 12 months’ take-up “will be back on the market within the next year as a direct result of the stock market crash”.
These vacancies, combined with new space coming onstream, “will undoubtedly leave central London with massive voids”, the report declares. Winter & Co estimate that these will total 4m sq ft in 1988 and 8m sq ft by 1989.
