Britain’s commercial property market remains robust despite the Brexit decision although a weaker economic outlook may see some prices dip over the next 24 months, ratings agency Moody’s said.
The report published on Monday says that the market experienced some significant uncertainty after June 23 in the medium term. However, it also says that solid fundamental are underlying the sector which will keep it stable, as Reuters reported.
“While political risk will keep market uncertainty high, commercial property sector fundamentals will remain robust in Europe. That said, a weaker macro outlook would take the steam out of the UK commercial property market,” said Ramzi Kattan, Vice President – Senior Analyst at Moody’s.
“While we expect slower economic growth in the UK as a consequence of Brexit, we do not foresee a recession or – perhaps most importantly – a sharp increase in unemployment,” the report said.
If the country manages to keep unemployment below 6%, the growth of employment would remain robust. This would support the demand for both housing and office space with London experiencing a higher level of uncertainty due to the fact that firms might move elsewhere.
However we expect those roles to take many years to migrate and total numbers may be relatively small, given that employment in London has increased by roughly 35,000 a quarter since 2012 despite a somewhat subdued economic recovery.”
“Nonetheless, the weaker macroeconomic outlook may take some of the steam out of UK property markets: in our base case, we see UK prices remaining broadly stable overall, but expect price decreases in particular instances of up to 10 percent depending on property type, quality and location.”