Real Estate Predictions 2012 - New Realities, New Perspectives

INTRODUCTION

By Claire Faulkner and Anthony Duggan

Making constructive predictions in the current market is not easy. The huge uncertainty and overbearing gloominess makes it all too easy to predict the end of the world as we know it. However, the one thing that the past tells us is that however stormy the current conditions, things will improve and more often than not, create significant opportunities.

We cannot, however, ignore the current climate. Commercial property values are likely to fall during 2012 as secondary property is hit again by risk aversion and tenant default. Retail in particular is due to suffer with the March quarter date a likely trigger point for a raft of retail failures. Both lenders and borrowers will see little respite in 2012 with the year likely to see more banks withdrawing from the UK market and others reducing their balance sheets more aggressively than seen so far this cycle.