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Fewer UK property businesses went bust in 2011, research shows

It found that a total of 123 UK real estate companies became insolvent in the last quarter of 2011, a 6% decrease on the previous quarter, when 131 companies entered insolvency. It also shows a 6% fall in comparison with the same quarter of 2011, when 131 companies became insolvent.

On a rolling 12-month basis, the numbers show a 3.7% decrease in insolvencies. There were 596 in the real estate sector in the year to 2010, compared with 574 in the year to December 2011.

‘The reduction in insolvencies is welcome and suggests an improved outlook, at least in some parts of the real estate sector. There are some signs that the effects of the downturn are easing and 2012 looks to be a better year,’ said Mark Batten, partner in charge of the real estate restructuring practice at PwC.

‘Lenders are managing businesses carefully to find solutions to help them stay afloat. By and large they have now have a good handle on their portfolios and are looking to work through problems with their borrowers, or to sell on their exposures, for example by way of loan portfolio disposal, but really only resorting to insolvency as a last resort,’ he explained.

‘The real estate sector is, however, not out of the woods and funding remains a key challenge with a number of institutions having withdrawn from the market. Notwithstanding this, the prime property market has remained pretty resilient, with transactions holding up. The secondary and tertiary markets remain challenged. This is the case for both residential and commercial sectors,’ he added.

Nationally, the worst affected sectors continue to include construction, 656 companies, manufacturing with 394, retail with 447 and hospitality and leisure with 375.

PwC's analysis shows that London continues to have the highest number of insolvencies with 941, and compared to the same quarter in 2010, shows an 8% increase in volume.

The East Midlands had the biggest increase in insolvencies compared to the same quarter in 2010 with 204 insolvencies in the fourth quarter of 2011 compared with161 in the same quarter of 2010, a 27% increase.
The most improvement has been recorded in the South East where the number of insolvencies has dropped by 21% since the last quarter.