Investors urged to find 'alternative finance'

People looking to invest in the commercial property sector need to find alternative solutions to financing if the market is set to avoid major falls in prices, according to an advisory firm.

Close Brothers has claimed that the value of the area could fall by £140 billion by 2012, which may in turn cause a possible second credit crunch.

The organisation has claimed that investors may need to use financing from debt conversion, new third party investment and partial asset sales to avoid such problems.

Gareth Davies, head of European restructuring and debt advisory for Close Brothers, said the commercial property market has not "seen a significant downturn since the early 1990s".

He added: "Banks adopted a strategy of selling assets into a distressed market however; this caused a death spiral with ever decreasing prices."

Research from Savills recently revealed that property development activity in the UK fell during the final month of 2008.