Ben Truslove, partner in Redditch-based property agents John Truslove, sees some green shoots for the economy.
An increase in the number of property valuations ordered by the banks is a sign that the West Midlands economy may be taking a turn for the better.
Certainly we as a firm are seeing more activity and it would fit in with the largely anecdotal evidence that banks are beginning to lend again.
Last year the number of property valuations they asked us to take on showed a significant increase over 2011, and the way 2013 has started it looks like being another strong year.
Valuations are a good indicator because this is, in effect, the starting post.
If a company wants to purchase a property or is looking to expand its premises then they will normally approach a bank for a commercial mortgage. The bank will then contact somebody like ourselves and ask us to value the asset. They need to know what the asset is worth should the firm hit hard times in the future. Will they get their money back?
So valuation activity is usually an indication of entrepreneurial intentions.
And at John Truslove we can claim to be something of a barometer – one of the first sectors into recession and one of the first out of it.
A snapshot in time for the entire region as from our Redditch headquarters we do valuations all over – from Wolverhampton and Stafford in the north to Worcester in the south.
In our case we are mostly talking the sub £1 million mark – typically the vital SME and owner managed business market – but the lights are on across the board including retail, offices and industrial. So that is encouraging.
Certainly a big improvement on the depth of the recession in 2008 when property values were in freefall.
Our impression is they have now leveled out and may even be edging up.
For example, and it may be a one-off, we recently completed a valuation of a property which came out better than what the client paid for it in 2004.
Naturally, as always, location will still have a big impact on the figure quoted.
There will always be some areas which for various reasons are never going to do much; conversely there are plenty of others with assets like strong footfall, available car parking and good communication links which are in demand.
So arguably the region’s economy is on a cusp … and that is being picked up on by the more astute business executives and industrialists.
The penny has dropped that perhaps freehold values are now as low as they are going to go – a chance for bargains which may never come again.
So companies which have always leased their premises are thinking to themselves – this is the time to buy. Especially those which battened down the hatches and stockpiled cash.
And of course if they do buy then it is one less overhead that they have to worry about.
The question people will be asking themselves is – can this brighter outlook be sustained and built upon?
After all, the last five years have been categorised by stop-start – recession, slow growth, double dip recession, slow growth, to a possible triple dip recession. Like an Ice Age with warmer interglacial periods.
But I am greatly persuaded by the valuations evidence.
Optimism and confidence are fragile indeed and sometimes seem to have a life of their own – full speed ahead in the good times and so hard to turn round in the bad.
Often scatty and easily knocked off course in the neither good nor bad times.
But let’s hope that sentiment is finally headed firmly in the right direction.
The indications are that this is the case even though there are bound to be setbacks along the way.
More valuation jobs for property agents like ourselves equal more companies trying to do things and a greater willingness by the banks to lend. It is a straight forward formulae with which we are very familiar.
Fingers crossed.
