Commercial Finance Specialists

Rics believes that banks are looking to sell distressed assets in an attempt to reduce exposure to bad loans.

Distressed commercial development assets are hanging over the UK market like a "thunderous cloud", it has been claimed.

Last month, a study by Leicester's De Montfort University found that UK property investment firms have over £50 billion of bad debt in breach of terms.

Now, in its latest survey, the Royal Institution of Chartered Surveyors (Rics) has found that its members believe banks are going to start selling distressed assets to reduce exposure to these loans.

Some 42 per cent more of Rics members expect to see rise as opposed to fall in distressed asset sales in the second quarter of 2010, which will lead to a crash in commercial property values as supply outweighs demand.

"This is the thunderous cloud which overhangs the market despite some glimmers of light having shone through in the past year as risk appetite has improved," said Oliver Gilmartin, senior economist at Rics.

These comments those made to City Wire by Standard Life Investments' investment director Andrew Jackson last month.

Mr Jackson predicted the commercial property market would see values fall by up to five per cent this year.

Posted by Lisa Fear.