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U.K. commercial property values declined by 0.7 percent in the first three months of 2012, the second consecutive quarter of decline, Investment Property Databank said.
Values are 31 percent below 2007 levels, making it difficult to refinance five-year loans that are in negative equity and are maturing, London-based IPD said today in a statement. The last time prices fell for two straight quarters was in the first half of 2009.
“The U.K. has fallen back into a technical recession largely due to a lack of business demand and a construction slump,” Malcolm Frodsham, director of research at IPD, said in the statement. “As property values continue to decline, investors are unlikely to want to develop.”
The gap between prime and secondary values is the widest since the early 1990s, the researcher said. Though prices in central London rose by more than 33 percent since the quarter ended September 2009, they are about 20 percent below levels in the three months through June 2007. Secondary properties, which make up large portions of U.K. lenders’ bad debts, have fallen in value by 6.1 percent over the last six quarters. U.K. values dropped 0.1 percent in the first quarter of 2012.
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