Disaster For Liverpool And Manchester Property Sector

Red Flag report spells disaster for northwest property investors
THE number of companies showing "critical" signs of financial distress in Liverpool jumped by 83% in the second quarter, according to the latest Red Flag statistics from Begbies Traynor.

The firm said the property services sector is facing most pressure, with a quarterly rise in the number of firms judged to be on the critical list.

Begbies Traynor partner John Fairbrother said: "Businesses in Liverpool – specifically in the Property Services sector – are trapped in a stagnant cycle that relies on corporate activity to flow.

"Companies in the commercial property sector are diversifying to deal with extremely slow market conditions – many agents are offering advisory services on issues such as rent reviews for landlords as there is little or no transactional work to be done.

“Very few businesses are entering into M&A activity at this time and so there are no new freehold premises coming onto the market; this has a knock on effect for property agents and other advisors connected to this cycle.

"Without a boost from Liverpool’s business community, much of the market will remain stagnant.”

In Manchester, there was a 31% increase in the number of firms judged to have "critical" issues, but the property sector again was the worst hit, with a 171% increase in distressed firms.

Partner Paul Stanley said: “Many half-finished developments sit abandoned due to a lack of funding. Quite rightly, the banks aren’t willing to provide further funding to finish developments off when demand for them is seriously diminished and it will be an uphill struggle to make a profit from the finished product."

"From a purely personal perspective, I now hold over 60 property receiverships covering several hundred properties compared to a handful between 1994 and 2008.”