The number of real estate firms in significant financial distress has jumped 16% in the third quarter compared to the same period a year ago.
This is the highest year-on-year percentage increase across any sector measured in consultancy Begbies Traynor’s Red Flag Alert research.
This deterioration has been even more marked since the EU referendum with a 78% increase in significant distress since Q3 2016.
The report found property investors experienced a 35% increase in significant distress compared to the same period last year as falling residential and commercial property prices combined with reduced consumer and business confidence had an impact on the sector.
The drop in demand has resulted in significant financial distress for businesses involved in “the construction of domestic buildings”, increasing by 8% from 5,825 last year to 6,305 this quarter.
Elsewhere, the tough trading conditions for high street retailers has now spread to the e-commerce retail sector. The latest figures demonstrate that online retailers have experienced a 10% increase in significant distress since Q3 2018.
The overall increase in retailers in financial distress since Britain voted to leave the EU has been considerable with more than 31,000 retailers now in significant distress, up by 28% since Q3 2016.
Julie Palmer, partner at Begbies Traynor, said: “Much investment is on hold as businesses have their hands tied by not knowing what the state of play will be post-Brexit and whether the agreements or contracts they currently have in place will still be valid following the expected withdrawal, which is contributing to stifled growth nationwide.
“What’s clear is that until businesses and consumers alike are given clarity on the economic situation post-Brexit, stagnation will remain the norm and productivity will continue to suffer.”
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