Reactions coming in thick and fast follwing today’s Brexit vote. More to follow…
Blackstock Consulting’s team has laid out some initial views on what may happen now in the UK real estate market. Please contact us for more in-depth analysis or comment.
- City landlords will be having nervous meetings with their banking tenants
- London office rents – currently at market highs – may fall, hitting valuations which have been largely based on extremely positive (some would say unrealistic) leasing outcomes
- SMEs may find office space more affordable as a result of this
- REITs and FTSE-listed companies will suffer as stock markets jitter around like a heart monitor. However, put in context, share prices, despite being down between 15-25% percent for house builders and REITs – these prices remain well about the 2008 trough.
- House prices – will likely fall in some areas as market confidence falls, but could rise in others due to the massive discount now available to foreign buyers, with the pound down 15% against the dollar.
- Renting – London market may see drop off in demand, but regional markets should escape relatively unscathed. Institutional investors may think twice
- Prime property – London’s safe haven status damaged, international investors may move their ‘golden bricks’ elsewhere
- Construction – EU nationals who are concerned about their long-term work status may head home, compounding the shortage of skilled labour
- Lending – markets have been stagnant for months now at a commercial level. This is likely to continue, stagnating deals. Big agents were reportedly banning investment agents from taking holiday before August. This is likely to now not be the case.
- Retail – market uncertainty and rise in the cost of goods from falling pound will have a dampening effect on consumer spending. This could hurt retail valuations and rents.
- Energy performance rules – all governed by the EU under the Energy Performance in Buildings Directive – will be up in the air. Rules preventing poor performing buildings from being rented have just come into force.
- OJEU – the much-hated directive governing public procurement will be something nobody will miss. It typically makes it unviable for smaller or private firms without massive balance sheets to bid for public projects, such as TfL or Olympic contracts
- Scotland – a potential push for another independence vote could further stagnate investment north of the border
- Northern Ireland – a push for union with the Republic of Ireland could see a
- New Prime Minister and reshuffle – could unsettle policy-making providing opportunities and risks: it could mean a focus away from home-ownership at all costs and localism, two negative policy routes. But, given the position some Brexiteers have taken, it could make Britain more insular and put off investors