Real Estate Worst Hit in Recession

A new study done by R3 has been released identifying the sectors that were worst hit by the recession, revealing real estate, renting and business activities companies are the ones that have struggled the most.

R3 have tracked the activity in many sectors during the economic downturn and have noted that there were over 12,000 corporate insolvencies seen in these sectors.

This was shown to be far more than were experienced in the construction sector, a sector previously reported to be one of the worst hit.  There were 7,184 construction insolvencies over the smae period.

R3 president Steven Law explained that the real estate sector took a much bigger hit than any other.

"Clearly there was an oversupply when the recession took hold and, as people and businesses became less inclined to move, development projects could not be sold on," he said.

However, the pure size of the real estate market may have gone a long way to explaining the higher number of financial difficulties in this sector, with well over a million companies prior to the recession.

Mr Law added that a higher total of enterprises means that there would logically be a greater number of bankruptcies.

When insolvencies were viewed in proportion to the total number of existing companies, hotels and restaurants actually took the biggest hit, with 1.7 per cent going to the wall.

Real estate saw a rate of 1.1%, coming in fifth place on the list.

Posted at 04:28PM Aug 04, 2010 by Marc Stenton in Insolvency  |  Comments[0]