Eyes Openers
  • World News
  • Business
  • Stocks
  • Politics
  • World News
  • Business
  • Stocks
  • Politics

Eyes Openers

Business

Warehouses, offices and shopping centres ‘to lose fifth of their value’

by October 14, 2022
October 14, 2022
Warehouses, offices and shopping centres ‘to lose fifth of their value’

The sharp rise in borrowing costs since Kwasi Kwarteng’s “mini-budget” means that most of Britain’s warehouses, offices and shopping centres will lose as much as a fifth of their value over the coming two years.

The warning came from Goldman Sachs, whose team of analysts sounded the alarm over the outlook for UK commercial properties, values of which they expect will be 15 per cent or 20 per cent below where they were this summer, come the end of 2024.

The US investment bank’s gloomy outlook will add to fears that commercial properties in the UK are on the brink of another sharp fall.

As with homeowners, rising interest rates have made borrowing more expensive for commercial landlords too. The five-year swap rate, used to determine finance terms for commercial borrowers, has climbed above 5 per cent in recent weeks, having been at 0.55 per cent this time last year.

Having crunched through the numbers, Goldman estimates that commercial landlords’ borrowing costs could rise by 75 per cent over the next five years.

Higher interest rates and bond yields not only increase loan costs but also prompt would-be buyers to demand better returns on their investments.

Consequently, Goldman is forecasting that rental yields will have to rise by about 135 basis points over the next two years. That yield expansion does not look as if it will come from rental growth, the analysts said, meaning that it will have to be driven instead by a drop in headline prices.

Retail landlords have endured a rough decade or so as shoppers spend more and more online, while they went without millions of pounds of rent when their tenants were forced to shut for long periods during the pandemic.

They are again expected to feel the coming pain most acutely, Goldman predicts. With UK consumer confidence at record lows, retailers’ sales and margins are likely to come under pressure while they are also having to deal with rising energy and labour costs.

“This combination of revenue pressure and rising costs we think will act to put pressure on margins and weaken tenant credit quality,” the analysts said.

Goldman has bearish “sell” ratings on both Hammerson, which owns the Bullring mall in Birmingham and Bicester Village, and Land Securities, the owner of the Bluewater shopping centre in Kent.

Read more:
Warehouses, offices and shopping centres ‘to lose fifth of their value’

previous post
N. Korea fires missile, flies warplanes near border as South imposes sanctions
next post
Banks set to reign in lending as economic outlook darkens since September’s mini-budget

Related Posts

Number of restaurants and food outlets entering liquidation...

November 8, 2022

Brits now more concerned about state of UK...

March 20, 2023

Krishen Iyer shares why customer-first approach is essential

February 13, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Popular Posts

    • 1

      Head of Republican Party mocks speaking abilities of Fetterman, Biden

      October 28, 2022
    • 2

      Head of International Monetary Fund warns of increased risks to stability of financial system after weeks of banking sector turmoil

      March 27, 2023
    • 3

      Biden’s unwarranted bragging about reducing the budget deficit

      September 26, 2022
    • 4

      Russian TV is very excited about Такер Карлсон’s Nord Stream theory

      September 30, 2022
    • 5

      Strong Sector Rotation To Financials, but will it be enough to turn the market back up?

      October 14, 2022

    Categories

    • Business (2,076)
    • Politics (2,363)
    • Stocks (907)
    • World News (1,533)
    • About Us
    • Contacts
    • Terms & Conditions
    • Privacy Policy
    • Email Whitelisting

    Disclaimer: EyesOpeners.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2023 EyesOpeners.com | All Rights Reserved