Savills Says UK Lenders Have to Negotiate with Borrowers

The annual property financing presentation was open by Savills, an international property advisor, on June 3rd 2009 by addressing lenders on whether to buy, sell or hold commercial property assets as they have reached negative equity, which amounts to £50 billion. Savills experts, including Mr. William Newsom, who takes the post of UK Savills Head of Commercial Valuation, believe that lenders who have large loan books have to keep on with lending in order not to cause lack of liquidity in the market. They have to cooperate with clients where possible to achieve stabilisation in the commercial property market, which has seen a 41% decline in property values over the past 7 quarters. Savills research suggests that 12 largest UK lenders account for 77% of commercial property lending in the country; 8 out of the 12 lenders are organizations that will have to work through their existing commitments. Savills named 22 organizations that are ready to keep on with lending to new customers, 14 of which are overseas with 10 being German. Head of Savills Commercial Research, Mr. Mat Oakley, said that the situation on the commercial property market might soon be stabilizing as the flow of investment starts to re-establish itself (for instance, international transaction have already accounted for 40% in 2009 compared to 31% in 2008). At the same time, according to Jim Ward, who takes the post of director of Savills Residential Research, UK residential property market has seen a significant increase in buyer activity due to cash-rich buyers and in the number of sales agreed at price levels, which are 20-30% lower than in 2007. Despite all of the good news, Savills outlook for the future is still uncertain, however, the recovery is forecasted for 2010. The forecast is based on the analysis of previous property cycles and by recent property data.