Global property advisor CBRE has found in a new study that 72 per cent of banks in central London are planning to sell some of their commercial property assets.
With the economic situation remaining clear for the foreseeable future, many banks are looking to dramatically reduce their portfolios over the next two years. Furthermore, 34 per cent of firms were going to consolidate their assets especially by responding to the increase in M&A activity, whilst 56 per cent predicted that they would have to consolidate in the near future. Only six per cent of banks stated that they were going to keep their assets the way they currently are.
Senior director of CBRE's central London tenant advisory group Frances Warner-Lacey, said: "London’s cultural advantages, its preferable time zone and reputation as a world class city, means that the best talent and biggest institutions still want to be based here and we don’t expect to see a shift in sentiment.
"The pressure on the banks in recent years has undoubtedly had an impact on their real estate requirements and recovery in the sector is likely to be slow in an environment of tighter regulation. That said, there are signs of growth in M&A activity, financial technology and asset management and this represents some positive news for London.”
Banks have been struggling since the global financial crisis hit back in 2008. Whilst economic recovery is seemingly on the horizon, many organisations, not just banks, have been forced to cut down on their expenditure to retain profit levels and this may include selling away some commercial investments.
Analysts fear that these movements may cause investors to deter away from the commercial sector, but a clearer picture on the market will not be painted until the official second quarterly figures are released later this year.