Commercial property price slowed in growth for a second consecutive month in February, despite signs of recovery in the last quarter of 2016, following the EU referendum.
MSCI’s real estate index identified a 0.17% asset growth compared to January, with overshadowing stable rental growth, with total returns dropping from 0.71% in January to 0.625% in February.
As a result of the Brexit vote in June 2016, a substantial number of occupiers have postponed or eradicated plans for expansion, with buyers and occupiers employing a more cautious approach to the market as a consequence.
Zachary Gauge, European real-estate analyst at UBS, provides a suited warning to commercial property stakeholders: “Brexit hasn’t started yet, and I don’t think anyone really knows what the medium- to long term consequences are going to be”.
Certain financial firms, amongst the highest users of London office space, have warned that they may pack up and move overseas, should Brexit implications deny them from servicing EU clients from the UK.
Great Portland have already sold Facebook’s London headquarters building at a discount, whilst British Land managed to secure an above valuation price for the Leadenhall Building.
Whilst Brexit’s impact on the financial sector poses the threat of a substantial decline in residential and commercial property prices in London, the devaluation of the pound would likely be beneficial to the manufacturing sector, which provides a significant amount of jobs in the North West, Click Liverpool reports. As such, it is unlikely that there will be any similar impact on residential or commercial rents in the North West of the UK.
The only thing that is certain is the uncertainty and unpredictability of the market, leading to London slowly but surely losing the wow-factors it has built up over years.