It has been suggested that the moves to make credit more difficult to obtain could help to boost the commercial property sector.
Although the conventional wisdom suggests that the so-called credit crunch will result in less finance being available for commercial property companies - and therefore fewer buildings being established - it has been claimed that a tougher market could be good news for some firms. That is the view of Stephen Hester, chief executive of property company British Land, who argues that his company is set to benefit from tighter controls on credit.
Announcing a sound set of first quarter results for British Land, Mr Hester explained to the Daily Telegraph:
"We've been defying the doom-mongers as recent property sales have been ahead of net asset values."
Describing the current climate as "uncertain times", Mr Hester added that all his company can do at times like this is ensure that it is in good shape and in a strong position to cope with tougher conditions. He remained unconcerned by the current position in the commercial property sector, concluding: "Markets are cyclical and there will be periods of contraction and expansion. It's futile me making a prediction - all I can do is make sure British Land is positioned for a range of outcomes."
As the credit crunch begins to bite in the commercial property sector, it seems clear that companies will have less money to invest in new projects, but Mr Hester appears confident that this will be a passing trend.
If he is right, companies who will be able to use a slowdown to take stock and improve their internal processes will be well-positioned to take advantage when the current cycle moves on to better times.
British Land announced headline pre-tax profit of £267 million during the first quarter of 2007, well below the company's 2006 first quarter results of £500 million. The company explained, however, that this was due to the impact of property disposals and of converting into a real estate investment trust. When these exceptions were stripped out, British Land reported an underlying profit of £76 million, up by four per cent on the same period in 2006.