Savills reports lowest activity in commercial property sector since index began in 2003

Development in the commercial property sector has fallen to its lowest level since figures began, according to an index prepared by estate agent Savills.

Savills said its commercial development activity index fell to minus 40.7 in September, with 48% of respondents indicating a fall in development activity compared with just 7% finding an increase. This is the lowest figure since Savills began collecting the data in 2003.

The private sector development market was particularly badly hit, with a balance of reported activity of minus 44, compared with minus 35 for the public sector.

The worst-hit sector of commercial property was the private office market, with development falling to a minus 47.6 balance. However, the public sector retail and leisure market was more stable, showing a balance of 27.5.

In addition, expectations of future development activity were even lower, with the index recording a balance of minus 46.2.

Mat Oakley, head of Savills' commercial research department, said: “While the recent actions of the Treasury and the monetary policy committee are by no means a panacea to developers' current problems, they are small steps in the right direction.

“We expect the funding environment to improve in 2009; however, development finance will remain hard to obtain.”