A full commercial property recovery will not happen for around five years, because of the prevalence of lower grade schemes that are “mired in debt”. That’s the view of some is commercial property sector experts who believe that the current bubble in prime London schemes is masking a much graver picture nationally, particularly with regard to lower quality property in less desirable locations.
There is around 280 billion pounds worth of unpaid commercial property loans in the UK, of which 25% are tied to poorer quality buildings. This has meant that some banks may have their ratings downgraded as a result of their portfolio of property. Until they offload this portfolio of lower grade assets, a full recovery and a return pre 2007 lending levels will not be possible.