For in-depth analysis on wider issues surrounding business credit risk look no further than Graydon’s In Credit blog.

Real estate sector warned of further challenges despite drop in failures

17 October 2012

The real estate sector continues to face many challenges on the road to recovery despite insolvencies decreasing in the last quarter.

Analysis by PwC shows a total of 139 UK real estate insolvencies recorded in the third quarter of 2012. This represents a decrease on the previous quarter, when there were 174 insolvencies.

When compared to the same quarter in 2011, the figures show an increase of six per cent.

Mark Batten, real estate restructuring partner at PwC, said: "There has been no material improvement in underlying economic conditions or the availability of debt finance, as a result of which conditions continue to remain challenging for the real estate sector as a whole and are likely to remain so.

"Against this backdrop the decrease in insolvencies this quarter is welcome, although I do not think is indicative of any longer term trend."

The warning that insolvencies are likely to rise in the real estate sector over the coming months suggests that companies exposed to the sector should take precautions. Companies should take a proactive approach to risk management and regularly review the credit status of businesses in their supply chain.

Using one of Graydon's credit risk monitoring services allows you to keep an eye on customers, suppliers and competitors for any changes that may impact on your business.

The real estate sector was one of the worst hit industries during the recession. It suffered as people and businesses became less inclined to move and development projects could not be sold on.

Research by R3 found that between 2008 and 2009 there were more than 12,000 insolvencies in the sector. This was almost double the number of insolvencies of the second most affected sector, construction.

The warning that insolvencies could increase in the sector serves as a reminder that despite the recession being officially over the effects will be felt for some time to come.

This entry was written by Ranjna, posted on 17 October 2012 Bookmark the permalink. Follow any comments here with the RSS feed for this post. You can post a comment.

Post a comment

credit risk intelligence