'UK commercial property defaults to rise in next 12 months'

Eighty-six percent of UK property professionals expect default levels on commercial property to increase over the next 12 months, according to new research commissioned by Investec Private Bank's Structured Property Finance division. Of these, 31% believe that default rates will increase significantly while the remaining 69% foresee a marginal rise.

Despite rising defaults, 83% of respondents were optimistic that banks would continue to lend to property investors and developers, albeit on a more restricted level. An additional 12% believe that banks would only marginally tighten lending criteria while only 4% thought banks would for the most part cease lending.

'This reflects our view that while we are undeniably operating in tougher market conditions today, we’re optimistic that strong lending opportunities remain. We are continuing to work on a number of highly promising deals with both new and existing clients,' said Paul Stevens of Investec. 'The key to obtaining finance in the current environment is to have a successful track record and the ability to add value.'

The Investec survey also asked property professionals about their general forecasts for the UK economy. Over a third, or 36%, of respondents said they thought a recession was likely in the UK while 23% thought it was unlikely. The remaining 44% of respondents said they remain undecided on the prospects for a recession.

A total of 137 property professionals were surveyed by Property Week from 11-13 April for the Investec survey.