Pictured above: Ian Kibble
Greece's economic woes might seem remote, but they could easily
spell trouble for the UK commercial property market according to
the head of the Birmingham office of national commercial property
firm Lambert Smith Hampton (LSH).
Ian Kibble, regional director for LSH, warned that if the EU's
second bail-out didn't work, the shockwaves will not just be felt
across Europe. The UK will suffer too, and commercial property
could be one of the first sectors to come under pressure.
"If there is a Greek default - be it orderly or disorderly - it
will severely affect bank lending which will have a serious
knock-on effect for the UK property market. There will be losses
among many of Europe's banks, bond and swap rates will climb,
economic sentiment will plummet and debt will be increasingly
difficult to get hold of. This will be bad news for the UK where
banks are already slashing their exposure to commercial property,"
he said.
He added, "There is a strong school of thought that the second
bail-out has not brought an end to this, and confidence in the
Greek government's ability to enact the austerity measures on a
reluctant population is low. While everyone hopes that Greece will
be able to service its debts without threatening the economic
recovery of other countries, we have to be prepared for the
worst
"A default would have severe consequences for the whole of
Europe and the UK would be far from immune in terms of economic
confidence and the ability to access finance. One of the biggest
risks is that the contagion would spread westwards, to Spain,
Portugal and Ireland. Already we have seen outwards movement of
their respective government bond yields and their indebted
economies make them vulnerable. With UK banks exposed to
£120bn of Irish debt, £80bn of Spanish debt and
£18bn of Portuguese debt it is easy to see how domestic
organisations, still reeling from our own recession, would be
severely hit."
"For the UK property market, the best scenario is that the Greek
austerity measures work and there is no default. Economic growth in
Greece would in all probability, come to a stop, but the rest of
Europe would not be severely affected and the UK, outside the
Eurozone, could concentrate on its own recovery."
For more information about Lambert Smith Hampton, please visit
their website here: www.lsh.co.uk