Developers gloomier on property upturn

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ANY recovery in the commercial property market is unlikely until late next year at the earliest, according to the professionals.

The quarterly poll of developers and institutional investors conducted by Gallup for Chartered Surveyor Weekly is even gloomier than it was at the previous low point last December, and far more depressed than in the immediate aftermath of the election in April.

More than 90 per cent of those polled did not expect any recovery until the second half of 1993, and a quarter expected it to be delayed until 1995 or beyond. Moreover, the outlook would remain almost as gloomy even if, as the respondents hoped, the Government reduced interest rates by 2 percentage points or more.

Property leaders are especially negative about the office and industrial markets, and are fighting shy of London and the South-east. Only 10 per cent expected an increase in demand for office property within the next year. Two-thirds of those questioned believed that office rents will fall still further.

They are less gloomy about retail property than any other sector, although the outlook has darkened. Four fifths believed that rents - and yields - would harden. Worst-hit of all is the 'business space' sector, which includes business parks, other out-of-town office blocks and the former warehouses and light industrial buildings that can now be converted into offices.

More than two-fifths of the property companies polled admitted that they were over-geared and were planning large asset disposals.

The regional trends echoed the sort of deterioration in the outlook outside London and the South-east also shown in recent CBI surveys. Pension funds and insurance companies were planning to confine their investments to northern England, the Midlands and East Anglia.

Their German equivalents are also expected to increase their involvement in British property, despite the hammering taken by their French, Swedish and Japanese brethren over the past five years.

One glimmer of light is that 'wealthy individuals' - many of them developers who sold out at or near the peak - are expected to start bottom-fishing.