Surprise’ rise in administrations hit property and hotel sectorsFeb 08, 2014
The latest statistics from the Insolvency Service are counter to the current positive economic indicators and will be a surprise to many, says a leading analyst.
The hotel and restaurant sector also saw a 50% increase in administration appointments.
Overall administration appointments rose by 18% in Q4 of last year, the Insolvency Office has announced. The real estate sector has seen an increase of 57%.
Steve Elsigood, restructuring director for KPMG in Milton Keynes, said : “The sharp increase in administration appointments for the last quarter of 2013 will come as a surprise to many, running counter to the increasingly numerous positive economic indicators.
“It is perhaps even more surprising that the property sector, which is purportedly enjoying another boom, saw such a marked increase in administration appointments at the end of the year.
“The numbers should not necessarily set the hares running as history has taught us that many businesses, perhaps counter-intuitively, struggle to survive when economies pick up again as over-trading tips them over the edge. However, the numbers represent a cautionary warning that we should not herald a full recovery just yet.
“ It is certainly true that pockets of the South East are seeing huge increases in property values but this is not the story of the UK property market overall.
“While the volume of administration appointments in the hotel and leisure sector is a fraction of the number of overall appointments in the property sector, the large increase shows that this sector is still struggling to put down the roots of recovery.”
The overall insolvency statistics, including liquidations and receiverships were down by 7%.
The level of administration appointments is the barometer used by restructuring professionals to measure the level of insolvency activity in England and Wales.