After years of asset price growth underpinned by ultraloose monetary policy, the party for commercial property seems to be over. A confluence of adversity is hitting the sector.

First came lockdowns with the locking up of customers that would otherwise frequent leisure, retail and office facilities. Tenants were statutorily protected from contractual obligations to pay rent and landlords were largely left to fend for themselves.

With lockdowns was also instilled the new habit of working from home. Demand for office space may have taken a structural hit from which it may not recover.

When we emerged from lockdowns, rubbing our eyes to make sense of the new world order, markets were then hit with a level of inflation not seen for forty years.

Amongst the manifold adverse consequences of lockdowns were broken supply chains and broken labour markets. They could not cope with resurgent demand. Fuel prices and other commodity prices rocketed. Matters were exacerbated by the outbreak of war in Ukraine.

Property markets generally benefit from inflation but not the concomitant interest rate increases with which it is accompanied. Interest rates have rocketed from their ultra-low levels, straining even modest levels of debt secured on property.

With income down and interest rates up, the commercial property market dived. And, not surprisingly, as interest rates increased, banks, pension funds and insurance companies retreated from lending to and investing in the sector. They had already had their appetite for property reduced by ever restrictive capital adequacy requirements and regulations.