London – Colliers International respond to the news that the UK has voted to leave the European Union, with 52% to 48% in favour of leaving the EU.
Walter Boettcher, Chief Economist and Director of Research & Forecasting, Colliers International said:
“New uncertainties arising from the vote may begin to crystallize UK commercial property late cycle risks and we foresee some pricing adjustments across core and non-core assets. These will have a knock-on effect with some investors who may well continue in the ‘wait and see’ mode in the short term at least. Similarly the occupational markets will slow as businesses assess the impact of the Leave vote.”
In summary, our opinions on the impacts of the EU Referendum vote on the UK real estate market are:
- Market Fundamentals: The UK is the fifth largest economy globally putting it in a strong position when negotiating trade deals with both EU countries and elsewhere after Brexit. The UK is still the EU’s largest customer and a devaluation in sterling is likely to boost demand for UK exports as they begin to look cheaper.
- There may be a lull in occupier confidence and demand while companies assess the impact on their businesses and their future property requirements. None the less, underlying demand continues to exceed the supply of new available product in the UK.
- Investors will no doubt proceed with caution and total transaction volumes in the UK will be subdued during 2016 in comparison with recent years. Notwithstanding, international buyers of real estate have the added advantage of purchasing at a time when currency arbitrages can be exploited, making their favoured UK destinations more attractive. Early indications are that we are not at a standstill and some deals will push through irrespective of today’s result.
“Commercial property forecasters are faced with a clash between theory and reality,” speculates Walter Boettcher. “If the financial market movements remain within the range of expectation there may be less impact on commercial property pricing and underlying occupier demand, than might otherwise be expected.”
Tony Horrell, UK CEO for Colliers International, added:
“Today, it’s far too early to know many of the possible effects and indeed the changing political landscape of the next few months will bring new issues to the fore.
“This is a result that will create a period of political, economic and financial volatility, all of which is likely to conspire to moderate real estate activity. Of course, we should not forget the UK’s significant real estate market, our appeal to international capital and our strong position in the global economy.”