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Property giants face cash calls

It is rumoured that Hammerson and British Land, two giants of the UK real estate sector, are set to ask investors for cash injections totalling £1 billion. There have been rumours for some time that the UK commercial property sector is in serious trouble with suggestions that UK banks may have to write off anything up to £200 billion over the next few years. The suggestion that Hammerson and British Land are set to tap shareholders for significant funding would appear to rubberstamp this opinion in the marketplace.

It will be interesting to see how UK investors react to these major cash calls (if the happen) from the real estate sector where property prices have been plunging for many months and do not yet appear to have hit rock bottom. Traditional funding is also a serious problem for the sector with money market liquidity and consequently banking liquidity still very thin on the ground.

Many people were expecting an influx of foreign investors into the UK property market after the demise of sterling but this has yet to appear although many feel it is inevitable. If the likes of Hammerson and British Land are in anyway struggling this does not bode well for the smaller companies in the sector who must also surely be feeling the pain.

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