LONDON, July 14 (Reuters) - Britain's economic slowdown heralds a wave of forced commercial property sales that could yet tip a downturn in real estate markets into a 1990s-style property crash.
Some new buildings could be left empty, while others could be taken over by creditors, causing the all-too familiar drag effect that haunted the industry for more than a decade last time around.
It took almost 13 years for UK commercial property values to regain their 1989 highs, according to Investment Property Databank.
Far fewer new offices are going up in London than was the case almost 20 years ago, and creditor banks have learned that foreclosure can make a bad property situation worse, but property derivative traders sense trouble ahead as occupier demand begins to wilt.
Much like UK housing index derivatives, commercial property index derivatives have priced in expectations of a total drop in values of about 35 percent from last summer peaks to 2010/11.
Insolvency experts are also gearing up for an expected surge in commercial property-related business, even though any debt-related distress has so far been limited to overstretched buy-to-let speculators and regional residential developers.
