Leading property industry figures are expressing concern at the chancellor’s failure to take the opportunity of the Comprehensive Spending Review to clarify some key issues for the property sector.
Dr Walter Boettcher, director of research and forecasting at Colliers International, highlighted the absence of any further comment on the Government’s moratorium on new Government leases.
“Given that there is some 2m sq ft of Government lease expiries in
Sarah Whitney, managing director of government and infrastructure at CB Richard Ellis, said the impact of the review on the property industry will be delayed as property cannot be turned on and off like a tap.
“It will take time to establish what the Government’s property portfolio actually looks like and to exercise breaks and lease ends.
“Interestingly, for some
“There is little new development stock in the pipeline in areas of high demand such as
“The offices will be refurbished and put back on the market, hopefully at about the same time as we see an upswing in the economy.”
Simon Moore, partner at law firm Osborne Clarke echoed the view that refurbishing property in time for a property market upswing could be the way to go.
“Local authorities and government bodies are missing an opportunity if they rush to sell empty office blocks or council homes resulting from public sector cuts,” he said.
“Real estate is a valuable asset. Rather than a piecemeal sell-off, pooling these assets and partnering with the private sector to re-develop will bring in bigger returns over the long-term.”
Meanwhile Jerry Schurder, Gerald Eve’s head of rating warned of “formidable practical problems to be overcome in using business rates values as the measure of the increment” in tax increment financing.
He said: “The success of TIFs will depend on accurate predictions of future property tax income, yet this is fraught with difficulty arising from the complexity of the rating system. “
Schurder urged the Government to involve rating specialists at an early stage, in order to ensure that the intentions are not frustrated.
Borrowing against uncertain income streams could stifle the initiative and
Schurder advised establishing the principle that the proportion of estimated TIF income retained to service the loan should be kept well below 100%.
nick.whitten@estatesgazette.com
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