Property Snapshot - March 2008 by Colliers Cre

· Interest rates held at 5.25% in March. Medium-term inflation risks growing, therefore evidence of ‘sharp’ economic slowdown deemed insufficient to justify cut. Eurostat business and consumer confidence surveys for February all negative. Services confidence -15.0.

· Libor 3-month rates drifting out. Increased by over 25 bps since January to 5.77%. New liquidity injections may be required. Five-year libor swaps also increased, but stable at around 5%. New instability as credit derivatives and structured credit unwinding.

· Revised GDP growth figures showed Q4 07 annual growth rate of 2.2%. February consensus forecasts for 2008 down to 1.7%. Consumption growth to slow to 1.7% from a 3.2% in 2007. Weaker sterling may benefit UK exporters this year.

· Mixed signals. Unemployment fell in January, but job market surveys indicated weakness, particularly in financial and business services. February PMI index of CIPS/RBS report showed manufacturing and services up slightly.

· US economy: private company payroll data suggests recession underway. February consumer confidence down to 75 -- lowest level in five years. Producer prices up in January 7.4% y/y, further pressure on consumer prices. House prices continue to fall.

Case-Shiller index down -9.1% y/y in December.

· Colliers CRE view: Economic slowdown deemed necessary to rebalance UK economy and relieve medium-term inflationary pressure. Statistical evidence of slowdown still limited. Employment holding up. US recession may be underway. Fewer UK

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source : Colliers