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Property values fall in subdued market place

Automotive property values have fallen by 40% over the past 12 months and as a consequence, both price expectations and rents have fallen.

According to property consultants Rapleys, uncertainties as to the future of General Motors’ businesses in Europe, coupled with the collapse of Saab and the short-term working initiatives at Honda and Nissan in the UK, gave cause for considerable uncertainty in the sector.

As a consequence, both corporate and property activity has remained “very subdued”.

Mike Pearce, Rapleys head of motor trade and roadside, said: “As the year went on, sentiment improved, particularly as dealers enjoyed healthy values and margins on used cars, while service departments remained busy as customers held on to their vehicles for longer.

“From a property perspective, 2009 has been one of further consolidation as dealers have shed unprofitable outlets.

“We estimate at the end of this year there will be at least 250 motor showroom properties vacant and on the market with little demand from within the trade.

“As a consequence, both price expectations and rents have fallen commensurately with values typically 30-40% below where they were at the height of the market.”

Pearce said there were few signs of an upturn in 2010 with the tightening of fiscal markets post-election, imminent expiry of the scrappage scheme and the return to 17.5% VAT.

He said: “These factors will dampen the market for new vehicles while dealers fear the reduced volumes of cars sold over the past couple of years will ultimately see through to lower demand for vehicle servicing and aftersales products.

“We anticipate 2010 will remain extremely challenging for those operating in the sector and we see yet further consolidation occurring through a combination of distressed and corporate insolvencies and the closure of smaller, more peripheral trading outlets.

“From a corporate perspective, there are now several well-funded dealer groups actively seeking to pick up opportunities and its likely that we will see one major group purchase during the course of 2010.” 

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