Too much confusion and no relief: property chief quotes Bob Dylan to sum up market malaise

Too much confusion and no relief: property chief quotes Bob Dylan to sum up market malaise

Bob Dylan's "apocalyptic opening lines" to All Along the Watchtower tell the story of today's "uncertain" commercial property market, according to the chief executive of developer Brixton who has accused the industry of underestimating the impact of the credit crunch.

In the company's half-year report, published today, chief executive Tim Wheeler revealed his despair at optimistic views of property values and pointed to Dylan's lyrics and cynical references to how business people were unable to judge the value of their assets.

Few bosses make reference to the lyrics of popular songs in their comments, despite many of them being members of what might be described as the rock'n'roll generation. Choosing Dylan, who is known for his antipathy to big business, is therefore a radical departure for the head of a FTSE 250 business.

Wheeler said that while the company's rental income was growing and sales of non-prime assets had bolstered its balance sheet, a future of low growth beckoned with few figures available to give a realistic picture of the current situation.

The company has been hit by a new tax on empty buildings and the fall in value of its rental portfolio. Brixton suffered a pre-tax loss of £236.7m, against a £192m profit last time with net assets down 26% to £1.16bn.

"What we said [earlier this year] still applies now: that there continues to be little transactional investment evidence in the general commercial and.....continued below

Advertisement starts

---

---

Advertisement ends

relevant to our specific industrial property markets," he said.

"The apocalyptic opening lines of Bob Dylan's 'All Along the Watchtower' seem to capture the beleaguered mindset of the UK commercial real estate market:

'There must be some way out of here Said the joker to the thief There's too much confusion I can't get no relief Businessmen they drink my wine Ploughmen dig my earth None of them along the line Know what any of it is worth'"

He pointed to the IPD UK Quarterly Index which has shown relatively modest falls in capital values during the first quarter based on only a handful of transactions.

"There is no real depth of evidence of willing buyers and sellers – the RICS Valuation Standards' assumption. Financing remains difficult and sellers are reluctant to crystallise lower prices.

"If the 'thieves' are the funded or equity based opportunist buyers and the 'jokers' are the owners who won't sell, there is no 'way out' of this impasse – yet."

Brixton, which became an investment trust last year, has spent the last 10 years becoming a specialist developer of industrial units mainly in west London and around Heathrow. After selling operations in Australia, Belgium, Germany and the US it spent £2.1bn building up its London base.

Wheeler said rental growth of 3.9% would allow the trust to increase the interim dividend by 2.1%.

guardian.co.uk © Guardian Newspapers Limited 2008