What Brexit means for the real estate industry and Britain’s business economy
It’s fair to say, initially at least, that the outcome of the UK’s EU Referendum had an effect on the commercial real estate industry.
Share prices of UK property funds immediately dropped, and six of the major fund managers suspended trading within a week of the vote to leave the European Union.
It’s no surprise then that a cloud of uncertainty hovers over Britain’s real estate industry - especially given the Bank of England’s warning of the risks posed to the commercial property market in light of the Brexit vote.
Yet, opinions are still divided over the long-term effect this monumental decision will have on Britain’s commercial real estate industry.
And it might not all be doom and gloom.
According to commercial real estate firm CBRE, leasing activity in central London rose by 24 per cent between June and July, bouncing back from a pre-referendum dip.
Real estate asset manager, LaSalle Investment Management suggested in a recent FT article that the downturn in UK commercial real estate is expected to be relatively contained Meanwhile Ezra Nahome, chief executive of Lambert Smith Hampton, part of listed property agency Countrywide, said “cooler heads have begun to return” to the market.
While the ramifications of Brexit are only now beginning to crystallise, there are those that argue that Britain might actually benefit from a steady decline in the value of Sterling; London’s real estate market could emerge as a potential opportunity for foreign investors – despite the ongoing political and economic uncertainty.
Though the long-term impact of Brexit on the commercial real estate industry and Britain’s wider economy remains unclear, the UK must, above all else, show the rest of the world that it remains open for business.
Emma Crawford, head of London leasing at CBRE, suggests that this is absolutely still the case, saying that “demand for office space remains buoyant. Businesses are still confident about London’s significant advantages as a global business centre, even when the UK is outside the EU.”
And as WiredScore’s UK Director, William Newton, argued recently, the UK still has a lot to offer the world.
London Tech Week highlighted the digital innovation coming out of the country, and Mayor of London Sadiq Khan has already emphasised that European businesses and citizens alike remain welcome in the capital.
Whatever happens to the commercial real estate market and the country’s wider economy over the next couple of years, one sentiment is clear: Britain needs to work to retain its position as a centre of entrepreneurism, skill and innovation, regardless of the country’s status outside the EU.