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March 16, 2010
Speed of Property Recovery is Unsustainable says MD of Carlyle Group
Since the end of last summer both commercial and residential property prices have been rising. A combination of factors including; a fall in asset prices, low interest rates and a weakening of the pound have made UK real estate attractive, particularly in comparison to most other European countries. However, Robert Hodges, European MD at Carlyle Group, writing in The Estates Gazette, believes that the pace of recovery is unsustainable. He outlines four key reasons.
- The U.K. will suffer from the fall out from the Greek bond crisis. He believes the problems that have hit Greece could spread to other European countries and he notes that Britain’s fortunes are closely linked to those of Europe who are our biggest trading partner.
- The next election could result in a hung parliament, but whatever the result, the budget following the election will be tough.
- Banks will struggle to extract value from the secondary assets they hold.
- Occupier demand is not consistent.
Whilst he paints a negative picture, he also gives some reasons for optimism; growth in G.D.P. turning positive, low interest rates and wider availability of credit.
It seems that whilst the cloud of the recession continues to hang over us, there is light appearing at the end of the tunnel, but a question mark remains over how long it will take us to get there.