Fewer business failures in the property industry is a sign that the sector is moving in the right direction, said Clare Hartnell, Global Head of Property at finance and business advisors, Grant Thornton UK LLP who was commenting on the latest (Q3 2010) provisional data on administrations in the property industry.

The business and financial adviser says that the huge decline in the number of business failures of 49% from Q2 2010 may be a sign that lenders are increasingly working with the borrowers to find a solution that avoids them going into administration. Also, the immediate panic when the economy started to slow down has calmed and there has been more time for businesses to identify possible strategies to continue to service the debt on loans. Property companies still face very difficult conditions which may worsen if house prices continue to fall.

"It is encouraging to see such a fall in the number of real estate administrations. However, this figure must be treated with caution as house prices continue to drop and, if this continues, it may have a knock on effect lifting the number of administrations in the property sector once more,” said Hartnell.

"The UK economy is still a relatively volatile place to be and the recently announced public sector cuts are effecting the confidence of many property companies as they impact future work in the sector," she said.

The Q3 2010 provisional data, issued by the Insolvency Service shows 37 administrations of property businesses. This is a 49% fall from the 72 real estate company failures in Q2 2010 and a 46% decrease from the 69 administrations in Q3 2009.