Will Britain’s Commercial Property Be Hit By A Brexit?
The UK commercial property market has been slowing of late amidst uncertainty surrounding Britain’s continued membership of the European Union. The upcoming June referendum has caused many investors to hold back on putting further money into British bricks and mortar, and many analysts are now voicing concerns about what a Brexit would mean for the commercial property sector as a whole.
Some the larger overseas financial investors look to be in agreement with the expert’s fears. Many are delaying UK real estate speculation until after all of the votes have been cast and the uncertainty has caused the market to slip somewhat over the last few weeks.
Are The Fears Justified?
Although the market may be somewhat jittery over the prospect of Britain removing itself from the EU, others are questioning whether or not these fears are justified. The polls are currently showing a 50:50 split at worst, and many are revealing that the majority of the British public actually want the country to retain its membership in the European Union.
Even if there was an exit, many believe that the change may not be as dramatic as some are predicting. While the larger institutions hold back, other investors are seeing the nervy market as a prime opportunity for property investment. Take 3 Associates, for example. They consider the British – especially London – commercial property market to be solid enough to withstand a Brexit should it come to pass in June.
“There will be a hiccup if Brexit does happen but I don’t think we’re going to fall into some kind of vortex of economic decline,” said Jesdev Saggar, managing director of the group. Mr Saggar went on to say that he remains confident over the prospects of 3 Associates investments in the capital over the next five years, regardless of whether or not the British public choose to leave or remain in the European Union.
Others Are Not So Sure
While Mr Sagger’s recent comments will be welcomed by many, other investors are not quite as certain about what will happen after June 23rd. AXA Investment Managers chief executive, Pierre Vaquier has publically announced that the company are currently in a “wait and hold” pattern as they evaluate the prospect of a British exit.
“There are questions over how a departure from the union would be executed,” said Mr Vaquier. “Will [the EU] say, ‘Fine, you are on your own’? This is unknown, uncharted territory.”
AEW Europe’s chief executive, Rob Wilkinson has a similar outlook and has said that the company will be placing conditions on any purchases that they make between now and the referendum in June. “Any transactions starting now [across the wider market] will find themselves holding their breath. If it’s ‘Out’ then the deal may stop,” he said.
If the British public do vote to leave the EU, the likelihood is that commercial property will take a hit and prices will tumble. The bigger question, however, is whether or not the UK’s commercial real estate market is strong enough to bounce back over the longer term. If it is, then companies with the foresight to take advantage of the nervy market now could see themselves sitting pretty in five years’ time.