Speaking at Construction News’s Opportunities in Commercial Construction conference, Mr Tuffin said that while the market had been dragged down in the wake of the credit crunch last year, there was evidence that the availability of credit was on the rise.
Describing market conditions as being at a “correction stage”, he said confidence of -investors and developers would be key to the market returning to health.
He said: “The market is active. The real smart money has already started to do deals on property. While some of the larger, more inflexible property companies have been selling property, they are only doing so to ensure they have funds to buy more attractive sites that may become available.”
Mr Tuffin believed clever property investors would start putting their money back into real estate as he anticipated that “when the herd wakes up there will be a weight of money that will drive values in the market up”.
Vinod Thakrar, project management director at developer Hammerson, was also confident about the commercial market going forward, saying his firm had a “fantastic” pipeline of projects in both the retail and office sectors.
These include a 335,000 sq m mixed-use development at Bishopsgate Goods Yard on the borders of the City of London that he anticipated would go in for planning within the next 12 months.
But Developments Securities projects director Duncan Trench sounded a note of caution about the sector’s prospects. His firm has a series of major schemes that are ready for construction but awaiting an improvement of market conditions before they get the go-ahead.
He said: “I’m not sure there has been enough blood on the walls yet. A few people perhaps need to hurt a bit more. I think by 2009 we should start to see a recovery.”
Analysis: It’s too early to start talking of a revival
By Bill Fishlock
It is understandable that the president of the RICS should seize on any encouraging signs in the property market.
But the suggestion that the commercial construction downturn could have bottomed, remains a minority view.
New office and retail development is dependent on the willingness of tenants to occupy space and pay rents which make schemes viable. This is not helped by a slowing economy and, if anything, vacancy levels are set to rise, particularly in the City.
Last week, property group British Land said the decline in property values is continuing, albeit at a slower rate.
It is hard to see the banks - now shoring up their balance sheets with rights issues - resuming lending on commercial property on the scale seen until recently.
Contractors who have seen the brunt of the slowdown borne by the housing and private industrial sectors may do better to pin their hopes on a resilient infrastructure market, than an early revival in private commercial.