Property Crunch Could Whack Brit Banks

The US subprime crisis is putting the brakes on Britain's commercial property boom, driving down real estate values and putting banks in jeopardy.

Market fundamentals have indeed changed quite dramatically for commercial property. One indicator is the so-called "average prime yield," which has risen during the past year -- a sign of cooling demand and weakening returns on property investments. Data from realtor CB Richard Ellis show the underlying price of real estate assets in Britain has declined relative to rents, causing the yield to rise. It climbed 50 basis points, to 5.7 percent, in the fourth quarter of 2007 -- some 90 points higher than during the same period in 2006.

U.K. Housing Market Won't Pick Up This Year

Such gains have now come to an end. U.K. home prices fell for a third month in January, according to Rightmove Plc, Britain's most-used property Web site. The average asking price for U.K. homes dropped 0.8 percent to 230,428 pounds in January from the previous month, Rightmove said last week. In December, there was a 3.2 percent decline.

Mortgage approvals dropped to the lowest in at least a decade in December as banks curbed their lending and higher interest rates deterred buyers.

Land Securities Sells Assets at Profit as Prices Fall

The sales in the three months ended Dec. 31 reaped 5.6 percent more than the commercial properties' estimated value at the start of the quarter, the London-based company said in a statement today. Land Securities, the world's fourth-largest real estate investment trust, has already leased 93 percent of the 241,700 square meters (2.6 million square feet) of development space due for completion in fiscal 2008.

Standard Life says UK property fund liquidity ok

LONDON, Jan 18 (Reuters) - UK insurer Standard Life (SL.L: Quote, Profile, Research) said on Friday it had not prevented retail investors from withdrawing cash from its flagship UK property fund, as liquidity in the fund remains sufficient.

"The situation is the same as in December. There's sufficient liquidity and there are no queues in place," to exit the firm's pooled pension property fund, said a Standard Life spokesman.