Commercial property development activity declined in the second quarter because of a lack of public sector building work.
The latest edition of the Commercial Real Estate Review by accountants BDO shows that public sector activity is falling at the fastest rate since January.
BDO says this is due to spending cuts in the public sector as the government tries to reconcile the public deficit.
The data shows a dip in activity levels from 4% in April and May, to -2% in June.
Activity levels are a net balance between developers reporting an improvement, deterioration or no change in development activity on the previous month.
However, BDO said while public sector development has fallen, the private sector remains stable.
Ten thousand commercial property transactions occurred in June, rising from 7,000 in May and 8,000 in April and total property returns were down marginally compared to Q1.
Solly Benaim, BDO’s head of real estate, said: “Following a steady recovery in the latter half of last year, the market is levelling out.
“The general economic tightening is bound to affect the market and it is encouraging to see the private sector holding steady.
“However the drop we’ve seen in public sector activity is likely to be the tip of the iceberg and the test will be whether the private sector is able to keep the market afloat whilst financing and stock availability remain a challenge.”
nathan.cross@estatesgazette.com
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