Property credit crunch (Part 2) ?
We all know that things are pretty bleak at the moment, but like all markets, there is always a bull market somewhere. Whilst the residential property market, save for niches in certain areas, has been in the doldrums with little movement, the commercial property market has bend doing reasonably well in the recovery, until now.
The macro economic conditions have of course taken a very significant turn for the worse in the last few months and consequently it now looks like we could have a second credit crunch.
Put simply, when it’s not safe to lend money to some of the biggest economies in the world, you can’t relay blame banks for being unwilling to lend generally, even though the lack of lending itself then becomes a big part of the problem.
As evidence of the rapid change in circumstances, Société Générale is reported to have decided to suspend new lending for European property indefinitely. It is indicative of just how fast things have deteriorated that only a month ago this bank was planning to lead a bank consortium providing nearly 330 million euros of debt to a multi-asset portfolio in Germany.
The move comes as a major setback for the property industry following another setback where Commerzbank’s commercial property lending subsidiary will also suspend new business for the first half of 2012.
