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Realistbear

Empty Offices In The City Of London To Double In 2008

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http://business.timesonline.co.uk/tol/busi...icle2358010.ece

From The TimesAugust 31, 2007
Office glut looms as bank profits weaken
James "Jim" Rossiter
Office vacancy rates in the City of London could double next year
to more than 10 per cent, leaving acres of empty space in buildings already under construction and postponing the start of several skyscrapers.
Savills, one of the City’s largest property agencies, made the prediction in a “worst-case” scenario for the lettings market. It assumes that a dramatic fall in profits in the big investment banks would force them to cut back on their demand for space.
The chance of that coming true increased this week as alarm bells began to ring about bank profits. Australia’s Macquarie banking group has reportedly put its property search on hold.

IMO, commercial property is a lead indicator for the residential market. With the City of London already in decline the job losses will begin shortly and the hottest property market in the world, "Flipperland", will crash overnight sending out shock waves accross the nation. With manufacturing no longer viable to keep Gordon's miracle economy afloat we have some hard times ahead. Despite the introduction of supercasinos to fill in the gap left by our now exported industry.

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From The TimesAugust 31, 2007
Office glut looms as bank profits weaken
Office yields are down to about 4.5%, below the yield on risk free goverment debt.
So "investors" are taking greater risk for no reward. It doesn't make any sense.
Either rents have to rise sharply, or prices need to drop. If rents drop, then prices have a lot further to fall.

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I FULLY REMEMBER THE LATE EIGHTIES AS I WORKED IN THE CITY, AND SAID ONLY THE OTHER DAY TO A FRIEND I MET FOR LUCH THEIR. JUST LIKE NOW, ALL THE NEW OFFICES BEING BUILT ,JUST IN TIME TO SIT EMPTY.

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http://travelhappy.info/bangkok/thailands-...-journal-video/

Thailand’s Ghost Buildings: The Wall Street Journal video

I like the video - even with the financial collapse, the city is still a very vibrant place to be today. But it just shows how business and easy money can disapear so quickly and unexpectedly. Clearly some investors and builders did'nt expect it.

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http://business.timesonline.co.uk/tol/busi...icle2358010.ece

IMO, commercial property is a lead indicator for the residential market. With the City of London already in decline the job losses will begin shortly and the hottest property market in the world, "Flipperland", will crash overnight sending out shock waves accross the nation. With manufacturing no longer viable to keep Gordon's miracle economy afloat we have some hard times ahead. Despite the introduction of supercasinos to fill in the gap left by our now exported industry.

Another useful link RB. You have always been completely consistent in your assertion of commercial property leading the fall. I had to travel through east London on the DLR the other day and was stunned by the amount of newbuild offices going up: so many cranes it looked like the South Bank in the late 80s. Huge, high-cost towers abutting Tower Hamlets, of all places! The square footage will be extremely high and with the present market indicators it will be interesting to observe how easily these newbuilds are filled.

TD

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